Kenya has inked a deal to join the Asian Infrastructure Investment Bank (AIIB) as a fully paid member after President William Ruto signed a formal agreement with the lender.
Ruto, on Tuesday, announced that Kenya had formally joined the financial institution, in a move that will see the country access concessional funding for state projects.
The funds, Ruto said, will go towards the realisation of the Bottom Up Economic Transformation Agenda, and bridge the gap of revenue deficit in the country that has been occasioned by the growing public debt burden.
A concessional loan is a loan that provides favourable terms compared to what’s in the market rate. This could be low interest rates or longer grace periods.
The deal to join AIIB was signed during the ongoing State Visit to China by President Ruto and other government officials.
The signing followed a meeting with AIIB President and Board of Directors Chairman Jin Liqun and other officials at the bank’s headquarters in Beijing, China.
“Kenya has formally joined the Asian Infrastructure Investment Bank (AIIB) as a fully paid member. The membership will enable Kenya to access concessional funding for infrastructure, climate change efforts, connectivity, regional cooperation and technology-enabled projects and programmes,” Ruto said on Tuesday.
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The Asian Infrastructure Investment Bank is a multilateral development institution with 109 members and Sh12.8 trillion ($100 billion) capitalisation.
Launched in 2016, the bank was proposed by Chinese President Xi Jinping to provide funding to developing countries as an alternative to Western lending institutions.
Kenya joins 13 other African countries that are members of the international finance institution. In 2023, AIIB gave out Sh205 billion to three countries namely Egypt, Rwanda and Cote d’Ivoire.
Kenya is grappling with financing options to settle debts and fund government projects in the current financial year.
This followed the Sh360 billion budget gap following the repeal of the Finance Bill 2024.
To bridge the gap, President Ruto proposed spending cuts and additional borrowing in roughly equal measure.
President Ruto is in China ahead of the Forum on China-Africa Cooperation Summit where he is expected to co-chair a session on the Belt and Road Initiative (China’s global infrastructure development strategy to invest in countries and international organisations).
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