Kenya could see a boost in investment from American fund management titan BlackRock Inc., as the company is reportedly considering acquiring a stake in one of Africa’s largest renewable energy enterprises, alongside other interested parties.
This move comes merely weeks after the company announced its withdrawal from the Kenyan and Nigerian markets.
The news, first reported by Bloomberg, indicates that African Infrastructure Investment Managers Ltd. (AIIM) is engaged in discussions with various firms, including BlackRock, to offload a portion of its stake in a leading renewable energy venture.
The talks began just 15 days following BlackRock’s declaration of its exit from Kenya, marking a significant shift in the firm's investment strategy on the continent.
Bloomberg's report suggests that BlackRock might acquire additional shares in wind energy projects, including those in Kenya.
Last year, BlackRock entered Africa's renewable energy market by investing in Kenya's Turkana Wind Power, the largest wind farm on the continent.
80 per cent of Kenya’s energy is renewable and according to the Powering Jobs Census 2022: The Energy Access Workforce Kenya report, Kenya's distributed renewable energy (DRE) sector, encompassing pico-solar appliances, solar home systems (SHS), and commercial and industrial (C&I) standalone systems, generated more than 48,000 jobs in 2021.
The report projects that these employment opportunities are set to increase, reaching an estimated 58,000 jobs by 2023. The investments in this sector could result in accelerated growth in this area.
AIIM is looking to attract major investors to further expand this rapidly growing sector. AIIM holds stakes in projects that either generate electricity or are in the process of constructing plants to produce more than 2,800 megawatts of power.
Most of AIIM’s renewable energy investments are based in South Africa, where over 6,000 megawatts of large-scale solar and wind plants have been installed.
However, the company’s reach extends beyond South Africa, with investments in a solar facility in Burkina Faso, a wind farm in Kenya, and various off-grid projects across the continent.
This strategic pivot by BlackRock follows a recent statement by Central Bank Governor Kamau Thugge, who highlighted a meeting with company representatives. They had initially identified Kenya as one of the top 10 economies for investment, driven by reforms in the foreign exchange market.
Despite these initial plans, BlackRock announced the liquidation of its investments in emerging and frontier markets, an exercise scheduled to conclude by August 12, with the final trading date set for March 31, 2025.
During the extended liquidation period, the fund will deviate from its strategy of holding at least 80 per cent of its net assets in equity securities tied to frontier markets. Instead, it will focus on selling assets and holding proceeds in cash and cash equivalents, as directed by BlackRock Fund Advisers.
The divestment from Kenya and Nigeria is driven by liquidity challenges and difficulties in repatriating funds in dollars.
This strategic withdrawal is expected to impact Nairobi’s aspirations of becoming East Africa’s premier financial and investment hub.
