Kenya was expected to sign a deal paving the way for setting up of the regional headquarters by the bank in Nairobi.
However, a letter has been written to the Ministry of Foreign Affairs and International Trade (MOFA) terminating discussions after the bank cited “fresh obstacles” from the ministry.
The ministry is said to be uncomfortable with several clauses in a draft agreement touching on taxation and diplomatic privileges.
Talks between Kenya and the African Export Import Bank (Afreximbank) on the setting up the long-delayed Sh3 billion regional headquarters in Nairobi appear to have collapsed.
Business Daily has learned that a letter has been written to the Ministry of Foreign Affairs and International Trade (MOFA) terminating discussions with Government after the bank cited “fresh obstacles” from the ministry.
The bank has had a longstanding dispute with the ministry over delay in granting the multilateral lender and its staff diplomatic status, a condition that Ethiopia is long reported to have agreed on.
The ministry is said to be uncomfortable with several clauses in a draft agreement touching on taxation and diplomatic privileges that Afreximbank had set as precondition for locating its regional headquarters in Nairobi.
“The Ministry of Foreign Affairs (MOFA) has responded but deleted a number of key requirements such as Diplomatic Immunity to the President of Afreximbank. As of now MOFA has not given the bank what the bank asked for. The gap between MOFA and the bank is so wide. From the response of MOFA it is clear they do not want Kenya to host branch of Afreximbank,” said a person familiar with the matter who sought anonymity due to the sensitivity of the matter.
“A letter will soon follow to say Afreximbank is relocating the branch to another East African country unless MOFA changes their minds,” the official claimed.
Kenya was expected to sign a deal paving the way for setting up of the regional headquarters by the bank in Nairobi.
The deal has been in the works for three years and has been threatening to unravel over the diplomatic status demand.
The Ministry of Foreign Affairs did not respond to Business Daily queries on the matter.
An earlier communication from Afreximbank indicated a deal was to be signed in January this year.
The move to relocate will mean Kenya losing out to Ethiopia, resulting in loss of economic gains that come with staff location. Kenya is seeking to create a regional financial hub in Nairobi.
Afrexim which finances and promotes African trade has in the past decade become a significant player in Kenya’s economy, having financed big-ticket deals including at Kenya Airways.
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