Markets & Finance

Kenya close to deal with Afreximbank


Treasury secretary Henry Rotich. FILE PHOTO | DIANA NGILA

Kenya is expected to finally sign a deal paving the way for setting up of a Sh3 billion regional headquarters of the African Export-Import Bank (Afreximbank) in Nairobi.

The country risks losing out to Ethiopia in the race to host the regional headquarters of the multilateral lender over a diplomatic row.

At the centre of the row is delay in granting the multilateral lender and its staff diplomatic status, a condition Ethiopia is said to have agreed to making Addis Ababa a formidable contender against Nairobi.

Afreximbank had indicated it would move to Addis if Kenya does not grant it diplomatic status by the end of last month. 

However the Business Daily has learned that a deal is in the offing and is likely to be struck either late this week or early next week.

Treasury Cabinet Secretary Henry Rotich says in a letter to Afreximbank that he has completed a review of the agreement and the same has been forwarded to the Foreign Affairs ministry for finalisation.

“This is to inform you that the Treasury has now completed review of the branch office agreement between the Republic of Kenya and Afreximbank after consultations with Mr Kudakwashe Matereke, regional branch manager for East Africa,” says Mr Rotich in a letter dated September 22 to the bank president Benedict Orama.

“We have forwarded the agreement to the Ministry of Foreign Affairs for finalisation and to formally communicate to Afreximbank.”

Mr Rotich goes on to suggest the signing of the agreement can be done on the sidelines of the 2016 annual meetings of the International Monetary Fund and the World Bank Group  to be held in Washington, DC. The event is slated for October 7-9.

READ: Afreximbank’s plan for Kenya regional office hit by tax war

Foreign Affairs ministry Cabinet Secretary Amina Mohammed did not pick our call to confirm progress on the matter.

The bank, however, said in a statement that talks were on course but declined to divulge further information. “Discussions are still ongoing on the Nairobi office,” Afreximbank Head of Communications Obi Emekekwue said.

Afreximbank was last month weighing options including moving the regional headquarters following a two-year wait for communication from the Kenyan Ministry of Foreign Affairs and International Trade.

The government was said to be particularly uncomfortable with several clauses in a draft agreement touching on taxation and diplomatic privileges that Afreximbank had set as preconditions for locating its regional headquarters in Nairobi.

The Treasury earlier told the Business Daily it had resolved all the outstanding issues even as Afreximbank maintained the stalemate continued.

“There was a misunderstanding by Foreign Affairs on the legal status of Afreximbank. Now that has been sorted out and approvals will be completed shortly,” Mr Rotich said in an earlier interview.

Afreximbank had wanted its employees and operations to be accorded diplomatic immunity and tax exemption in line with the privileges accorded other multilateral institutions.

Afreximbank had argued the privileges were not unique to Kenya as they had been granted by host governments in Abuja (Nigeria), Harare (Zimbabwe), Abidjan (Cote d’Ivoire), Tunis (Tunisia) and Egypt (Cairo), which is its headquarters.

The bank’s demand for special privileges is also supported by the fact that similar multilateral institutions and diplomatic missions in Nairobi enjoy the same.