Photo shows the sign of the Asian Infrastructure Investment Bank (AIIB). The China-initiated AIIB is a complement to existing international financial system. (Xinhua)
NAIROBI, May 6 (Xinhua) -- Kenya's decision to join the Asian Infrastructure Investment Bank (AIIB) is a continuation of the country's drive to diversify its core interests from the Western-led lending institutions, and to cement its relations with China that has emerged as a leading contractor of its key infrastructure projects, analysts said Thursday.
The AIIB announced Wednesday that its board of governors has adopted resolutions approving applications from Papua New Guinea and Kenya to join the bank, bringing its total approved membership to 86.
Kenya will officially join AIIB once they complete the required domestic processes and deposit the first installment of capital with the bank, according to AIIB.
Local economic observers hailed the move by the Kenyan government.
"Kenya's lag in infrastructure development for many years can be directly attributed to the conditionalities of the World Bank and the International Monetary Fund (IMF). This is a mistake that the country does not want to repeat again and therefore the choice to join a tolerant financial development institution," Ken Ogembo, a lecturer at the Kenyatta University, told Xinhua.
He gave an example of the proposed overpass along Nairobi's main traffic artery of Uhuru Highway that was expected to ease traffic congestion in Nairobi.
The road was approved by the parliament in 2008. "The World Bank withdrew from its funding pledge at the eleventh hour. To date, the road has not been done," Ogembo said.
Ogembo said Kenya's joining of the AIIB is part of its strategic plan to align with financial institutions that are "developing countries-minded" and therefore have a broader knowledge of the solutions for growth in a country like Kenya.
"We are likely to see more African countries join the Asian Infrastructure Investment Bank because it provides an opportunity for finding solutions for the south-south development challenges," he said.
In recent years, China-funded infrastructure projects was credited to help the Kenyan economy grow by about 5.5 percent on average in the last five years, compared to the 4.5-percent average growth in the previous five-year period, according to the ministry of national treasury and planning.
Kenya has been on a hunt for competitive development financing since 2002 when infrastructure upgrade and development drive started.
"China has been a true partner of Kenya as far as infrastructure financing is concerned. It is a chance that Kenya does not want to lose now as there is still massive demand for projects to open up the country further," said David Mutua of the Kenya Institute for Public Policy Research and Analysis (KIPPRA).
Among such demands is an ambitious development initiative launched by President Uhuru Kenyatta last year known as the Big Four Agenda, which seeks to transform manufacturing, food security, affordable housing and health insurance in the next five years.
"Kenya does not have the capacity to finance the kind of projects which are to ensure that this initiative succeeds. The demand for external financing is therefore massive. We are talking about constructing half a million houses for instance. Then you look at expanding irrigation to increase food security. These are capital intensive projects that will require support of partners," said Mutua.
The move to join AIIB is also seen as a vote of confidence on Kenya-China relations.
"Kenya is sending a message to China that 'We are with you for the long haul.' The gains that Kenya has made because of Chinese assistance are massive yet the need for further expansion of infrastructure is even higher as the country moves towards achieving a middle-income status," said Wilson Kamau, head of Africa Governance Institute (Kenya Chapter).
"It's a benefit Kenya could not have gained from the Western partners and would not gain in future," Kamau added.
Kenya adopted China as one of its preferred development partners in 2002 under the then president Mwai Kibaki. The bilateral relations have seen steady improvements since then.
According to study results revealed by Ipsos in April, more Kenyans have singled out China (34 percent) as the most important foreign partner to the Eastern African country compared with the United States (26 percent).
With 57 signatories at its launch in January 2016, the Beijing-headquartered AIIB aims to improve social and economic outcomes in Asia and beyond by investing in sustainable infrastructure and other productive sectors.
"We're very happy to welcome Papua New Guinea and Kenya as prospective members of AIIB," AIIB Vice President and Corporate Secretary Danny Alexander said Wednesday.
"AIIB now has 86 approved members from six continents. This shows a strong commitment to promoting infrastructure development through rules-based multilateral cooperation with high standards of governance," Alexander said.
