Kenya to benefit from $1 billion AfDB bond

Kenya is set to be a major beneficiary of a $1 billion (Sh86.7 billion) medium-term bond raised by the African Development Bank (AfDB), which together with the Treasury, were the main financiers of the Thika Superhighway.

AfDB announced on Friday it had raised the money through the five-year bond sold to a consortium of international investors.

“The proceeds of the loan will be used to finance the portfolio of African Development Bank operations across East Africa, including potential projects in power generation, agriculture, SME development, natural resource recovery and support of local financial institutions,” said Gabriel Negatu, the AfDB regional director for the East Africa Resource Centre.

Specific financing projects in Kenya will include the already approved Sh2 billion line of credit to the East Africa Development Bank and a $15 million (Sh1.3 billion) equity investment in African Trade Insurance.

AfDB-funded projects have to guarantee an economic internal rate of return of at least 12 per cent.

AfDB’s annual report 2011 shows that Kenya had borrowed 46 loans totalling Sh93.7 billion ($1.09 billion) out of the bank’s $11.2 billion, accounting for nearly 10 per cent of the continental lender’s loan book.

The Treasury has also indicated that it intends to float a sovereign bond this financial year.