Kenya Inducted In China's Infrastructure Bank
Posted on : Saturday, 5th May 2018
Kenya’s application to be inducted in the China-led Asian Infrastructure Investment Bank (AIIB) has been accepted, creating a big financial boon for the developing nation. It will be a cheaper solution for Nairobi’s financing needs with regards to infrastructure. AIIB’s Vice President and Corporate Secretary Sir Danny Alexander commented in a statement, "We're very happy to welcome Papua New Guinea and Kenya as prospective members of AIIB," with the addition of these two countries the bank has now 86 members in its union.
Starting its business in 2016, the concept of the multilateral development bank was first proposed by Chinese President Xi Jinping in 2013.The bank supports funding for construction of roads, railway lines, ports and energy as well as rural infrastructure, mainly in Asia.
Since 2016,the Kenyan treasury was in talks to look out for financing options in order to close the government's infrastructure funding gap, conservatively estimated at Sh180 billion annually. As announced by the AIIB, Kenya will officially join the union once all the local formalities are completed including the first installment of capital that will be deposited in the bank. The Cabinet Secretary for the National Treasury, Mr. Henry Rotech has yet to disclose Kenya's AIIB shareholding and investment details. Kenya’s upgrade to a lower middle-income economy in 2014 ended their special concession terms offered by the World Bank under the International Development Association hence pushing them to look for better and cheaper options.
The funding received via AIIB, will mainly be used to develop the transport, energy and agriculture sectors. Mr. Rotech said, "There is need to expand our funding and all these options are welcome to Kenya" So far China remains Kenya's largest bilateral lender. As recorded in December 2017, it has given Kenya an amount of Sh520 billion, supporting developmental projects.
Source : Business Daily Africa
