Kenya’s reluctance to grant the African Export Import Bank (Afreximbank) diplomatic status has forced the agency to move its Ksh3 billion ($30m) regional headquarters to Uganda, denying Nairobi the benefits that come with hosting such prominent international organisations.
Benedict Oramah, the chairman and president of African Export-Import Bank, Thursday confirmed that the multilateral lender is relocating to the Ugandan capital, Kampala, after Nairobi kept it waiting for more than three years for the necessary approvals.
Mr Oramah said that the lender is now set to sign a deal with Uganda before the end of the year to establish its regional branch in Kampala.
“It took too long to obtain the necessary approvals from Kenya, that is the reason we made the decision to go to Uganda at their invitation,” Dr Oramah said.
Relocating to Kampala means all potential benefits of hosting such an office, including investment in buildings, rents, and employment, will now accrue to Uganda.
Regional financial hub
Observers also see the loss of hosting rights to Kampala as a blow to President Uhuru Kenyatta’s efforts to create a regional financial hub in Nairobi and to open Kenya to Africans.
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 national carrier Kenya Airways.
The Treasury had in 2016 indicated that Kenya would finally sign the deal, paving the way for establishment of the regional headquarters in Nairobi. The plans had been in the works for over three years.
Cabinet Secretary Henry Rotich had said in a letter to Afreximbank that his office had completed a review of the agreement to set up the office and the same had 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,” Mr Rotich said in a letter dated September 22, 2016.
“We have forwarded the agreement to the Ministry of Foreign Affairs for finalisation and to formally communicate to Afreximbank.”
Besides, Mr Rotich had suggested that the agreement would be concluded on the sidelines of the 2016 annual meetings of the International Monetary Fund and the World Bank Group in Washington, DC between October 7-9.
It now appears that a decision by the Ministry of Foreign Affairs bureaucrats led by then Cabinet Secretary Amina Mohamed to dig in scuttled the process.
The Foreign Affairs ministry was said to be uncomfortable with several clauses in a draft agreement with the Pan-African lender touching on taxation and diplomatic privileges that Afreximbank had sought.
Afreximbank had wanted its employees and operations to be accorded diplomatic immunity and tax exemptions in line with the privileges accorded other multilateral institutions.
The lender had argued that 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), its headquarters.
It also cited special privileges enjoyed by similar multilateral institutions and diplomatic missions in Nairobi.
On Thursday, Mr Rotich asked the Business Daily to direct any questions on the deal to the Ministry of Foreign Affairs.
“I suggest you get comments from Foreign Affairs ministry, since they are the ones who sign host country agreements,” he said.
Foreign Affairs Cabinet Secretary Monica Juma remained tight-lipped on the matter when reached for comment.
Dr Juma was the Principal Secretary in the ministry before rising to the helm of the docket. Ms Mohamed, her predecessor, now heads the Education ministry.
The African states-owned Afreximbank, whose mandate is to help expand and diversify African trade, says it has approved more than $60 billion in credit facilities to African businesses since 1994.