Kenya has joined the China-led Asia Infrastructure Investment Bank (AIIB) to secure more long-term funding. The country faces financial challenges after the withdrawal of the Finance Bill 2024.
President William Ruto announced the membership after meeting AIIB officials in Beijing. The AIIB was created as an alternative to the US-backed IMF and World Bank. Through this membership, Kenya hopes to access funding for infrastructure, climate projects, regional cooperation, and technology. While AIIB typically doesn’t offer concessional financing, it provides grants through a Project Preparation Special Fund for eligible projects.
The AIIB offers loans for infrastructure and sectors like energy, transport, ICT, water, and urban development. These loans have repayment terms of up to 35 years. As a member, Kenya can also benefit from cheaper funding, which is important as global credit agencies have raised the country’s risk of default on sovereign debt.
Kenya’s Cabinet approved AIIB membership in January, aligning with the government’s focus on regional cooperation and the green economy. The AIIB, launched by China in 2016, challenges the US-dominated IMF and World Bank. Kenya’s membership in AIIB adds to its involvement with other development finance institutions like the World Bank, IMF, and the African Development Bank.
Currently, AIIB has 109 member countries and a capital base of $100 billion. This makes it the second-largest multilateral development bank globally. Kenya’s decision to join AIIB also coincides with the government raising its borrowing target by KSh 172.19 billion to KSh 1 trillion for the current financial year. This adjustment follows the withdrawal of the Finance Bill 2024, which left a KSh 344.3 billion deficit in the budget. President Ruto made this decision after youth-led protests against IMF-backed tax measures, high living costs, poor governance, and corruption.
