Kenya is set to benefit from a $3 billion (about Kes366 billion) financing from the African Export-Import Bank (Afreximbank) to accelerate the rollout of President William Ruto’s flagship projects in irrigation, manufacturing, youth empowerment as well as MSMEs.
The deal was unveiled last week during a meeting between Dr Ruto and Prof Benedict Okey Oramah, President and Chairman Afreximbank.
“President Ruto’s vision and sense of urgency was infectious and we couldn’t help but give him the supoort he deserves,” said Prof Oramah.
“This will allow us to expand our engagement with Afreximbank on several investment areas such as infrastructure, agriculture, commercial irrigation, housing, the creative industry and the MSME ecosystem,” noted Dr Ruto.
A technical team drawn from the Kenya and Afeximbank is expected to begin working on the structure of the support.
A significant part of the support will involve the establishment of a Kenya Climate Change Adaptation Facility where Afreximbank will put in place US$800 million financing towards building 100 dams towards doubling irrigated area in Kenya.
The focus will be on the regions experiencing water shortages as a result of the impact of climate change.
“We are proud to be using Kenya to launch the Afreximbank Climate Change Adaptation Facility under which we plan to disburse over US$5 billion in the 5 years to 2026 under Afreximbank’s 6th Strategic Plan” Prof Oramah said.
Under this scheme, Kenya plans to double the land area under irrigation from the current 670,000 acres to 1.4 million acres in the next three years to stem overreliance on rain-fed agriculture.
“We stand ready to kick-start this exciting programme with the Government of Kenya and promote climate smart agriculture. Our Project Preparation and technical teams will work with the Kenya government team on this project to develop a robust model and structure that will attract investors,” added Prof Oramah.
The financing will also encompass support for the development and operation of industrial parks in Kenya.
This is geared particularly to help in enhancing Kenya’s manufacturing and value-addition sectors. As a result, it will provide a major boost to intra-Africa trade under the Africa Continental Free Trade Area (AfCFTA).
The lender has also extended the ATEX pan-African pooled procurement platform for commodities to Kenya. This is critical in supporting the East African nation’s post Covid-19 pandemic economic stresses and the impact of the ongoing Ukraine crisis on global supply chains that have led to shortages and high prices of essential commodities.
“Afreximbank will put in place a facility that enables the timely and sustainable supply of basic commodities such as fuel, fertilizer, grains and edible oils. We also want to reorientate supply chains towards intra-African procurement,” noted Prof Oramah.
“For example, Africa produces more fertilizer than it uses and some of this gets exported, while some African countries import the same,’’ he added.
The bank will also support youth empowerment through its CANEX platform giving a boost to young talented Africans who are traditionally shunned by the financial services sector due to the traditional lending models.
The facility will complement the governments’ efforts to develop the film and performance arts, music, fashion and textile as well as art and crafts. This will see many young Africans benefit from their creativity and intellectual capital.
Prof Oramah and Dr Ruto also discussed the Pan-African Payment and Settlement System (“PAPSS”). They agreed that PAPSS was important in aiding region trading within the continent, through the use local currencies. The move, the two underscored, would be key in developing intra-Africa trade particularly among MSMEs as intended under the Africa Continental Free Trade Area charter.