To demonstrate its faith in efforts to address the issues facing the continent, Kenya plans to boost its $100 million stake in three significant African financial organizations, including the African Development Bank (AfDB).
During the opening ceremony of the African Development Bank’s annual meetings in Nairobi on Wednesday, President William Ruto announced that the additional capital infusion will also benefit the African Export-Import (Afrexim) Bank, headquartered in Cairo, and the Trade and Development Bank (TDB), situated in Bujumbura.
Dr Ruto claims that the new investments are intended to demonstrate the institutions’ confidence in their ability to assist raise additional funding from both within and outside the continent.
“Nations in this continent, we must begin to understand that if others are to believe in our institutions, we must believe in them first, as the owners…We must believe in ourselves for others to believe in us, and we must invest in these institutions for others to invest in them,” he said.
He claimed that although the Kenyan government has previously increased its investments in Afrexim Bank, it did not specify how much of the $100 million went to the financing company for continental commerce.
The governments of Africa, financial institutions based both inside and outside the continent, and a number of private investors operate Afrexim Bank, which provides loans to African companies and governments for initiatives related to trade.
Its earnings for the previous year increased by 66% to $756.1 million, and it paid out a $264 million dividend to shareholders, which was an increase of 66% over the amount paid out in 2022.
Kenya will own a larger stake in the leading development financier AfDB, which only lends to African nations, with the infusion of additional funds.
Last year, AfDB’s net income before distribution reached $545 million, the highest level in the bank’s history, while its earnings from loans and investments in treasury securities increased by 123% to $1.73 billion.
“I was motivated by the profits I saw and the dividends that will be paid, and I think it’s a very worthwhile investment and I want to encourage public and private entities to invest equally,” Dr Ruto said.
The AfDB is owned 60% by African member states and 40% by the United States, Japan, and India. With roughly 10% of the shares, Nigeria is the largest stakeholder.
The Common Market for Eastern and Southern Africa (Comesa) member nations, including Kenya, own TDB, which will also gain from the extra funding from Kenya.
Kenya is contributing an additional $20 million to the AfDB concessional window, which is mostly used to lend to fragile nations, on top of the recently announced $100 million contribution.
Dr Ruto said this is “a demonstration of Kenya’s confidence in the African Development Bank’s concessional window.”
“It is a demonstration that for us to raise $25 billion, we need to demonstrate our commitment and belief in the investment we are making in this institution,” Dr Ruto added.
