President William Ruto has announced a substantial investment of USD 100 million (approximately Ksh13.25 billion) in three major African financial institutions, aiming to bolster the continent's economic independence and inspire confidence in its banking sector.
During the African Development Bank’s Annual Meetings 2024, on Wednesday, May 29, President Ruto revealed plans for Kenya to inject funds into the African Development Bank (AfDB), African Export–Import Bank (Afreximbank), and the Trade and Development Bank over the next three years.
The investments are expected to increase the shares of Kenya in the banks. "As nations on 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," President Ruto stated, underlining the importance of African countries taking ownership of their financial infrastructure.
In addition to the investments in AfDB, Afreximbank, and the Trade and Development Bank, Kenya also intends to allocate USD 20 million to the Africa Development Fund (ADF), the concessional wing of the African Development Bank Group.
Established in 1972, the ADF provides assistance to countries in various stages of economic development, including those transitioning into emerging markets and those requiring special support due to fragility.
The African Development Bank, with its authorized capital subscribed to by 81 member countries, plays a pivotal role in supporting Africa's economic growth through its ordinary and special resources. Kenya's investment will contribute to strengthening the bank's ability to provide financial assistance across the continent.
Afreximbank, headquartered in Cairo, Egypt, serves as a supranational financial institution with a mandate to facilitate and promote intra- and extra-African trade. Kenya's pledge to invest in Afreximbank points to its commitment to fostering regional economic integration and trade facilitation.
President Ruto also seized the opportunity to voice his concerns regarding the current international lending framework, pointing to the need for fairer lending terms for African nations.
"We routinely borrow from international markets at rates far above those paid by the rest of the world, often up to 8-10 times more. These rates are said to factor in an arbitrary risk profile. Notably, it is not applied when considering mineral extraction even in the areas of active conflict. It is safe we are told, to mine in spaces where there is conflict, but it is risky to lend to African economies. What a contradiction," President Ruto lamented, highlighting the disparity in lending terms faced by African economies.
His remarks shed light on the challenges posed by unequal financial structures, which disproportionately burden African countries with high debt servicing costs, impeding their development efforts.
"The debt problems faced by many countries, which consume the largest share of national resources and starve the development agenda, are a direct result of [the] unjust financial architecture," President Ruto stressed, calling for reforms to promote equitable lending practices.
Kenya's investments in these banks are intended to increase its influence with the banks and allow it to negotiate for additional project finance.
The African Development Bank (AfDB) is one of the world's five largest multilateral development banks, offering financial support to member nations to help them accomplish their development objectives.
