Kenya joins China’s leading Asian Infrastructure Investment Bank, AIIB – Quartz Africa

Kenya has become the last country link the Asian Infrastructure Investment Bank (AIIB), the China-led financier established to finance infrastructure projects alongside schemes in energy, transportation, agriculture, telecommunications and more.

The East African nation joins two African states, namely Egypt and Ethiopia, along with a total of 86 others from six continents that have joined the financial institution since it began operations in January 2016. Kenya has yet to has revealed his intentions to join AIIB. or how much capital you plan to inject as part of your required share quota. But the move could be seen as part of the Kenyan government’s efforts to expand its financing options as agrees to update your infrastructure network.

Joining the AIIB is also only practical, given the lender’s rise as a global institution destined to rival the Bretton Woods institutions, namely the World Bank and the International Monetary Fund. From the beginning, it was reported that AIIB was willing to offer loans to emerging economies. with less tiesand removing conditionality on deregulation, privatization, and reforms that come with the help of the West.

China, which is challenging the imbalance of the global financial order, expanded the bank’s loan portfolio and partnered with multilateral development lenders from Africa, Latin America and the Islamic world to boost the bank’s footprint. The bank’s expansion is also indicative of China’s emergence as a major power that is taking on more global responsibilities, especially in the isolationist post-Brexit and Trump era.

The importance of AIIB also coincides with China’s ambitious One Belt, One Road initiative, which will spend up to $ 3 trillion on roads, ports and other infrastructure upgrades in more than 60 countries. For African governments, this is a substantial move, given that they have more and more I looked at China and the East in search of loans and the opportunity to expand their own economies. Both South Africa and Sudan are currently in the process to join the AIIB.

However, the sober assessment here is the increasing risk of over-indebtedness African nations face when accessing international debt markets. And while corruption and poor governance are partly to blame for these debt overloads, China is often accused of practicing “debt trap diplomacy.” This involves offering cheap and opaque loans that help you gain access to natural resources and advance your own geostrategic and diplomatic interests, while applying the sting of default if nations are unable to pay their interest.

But as the insatiable demand for investment in infrastructure and socio-economic development grows from African countries, the role of institutions like the AIIB will only come under increased scrutiny. This is especially true in Kenya, where China is now the country largest bilateral lender accumulating more than 66% of the outstanding debt in 2017 ahead of institutions such as the IMF.

And beyond the opportunities provided by AIIB, economist and development analyst Anzetse Were says that Kenya’s addition to the bank could “mask our indebtedness to China” as new loans will be classified as multilateral rather than bilateral loans. “The follow-up will be a bit more difficult,” he said.

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