The government is considering a Sh500 billion diaspora bond as an alternative to finance major infrastructural projects, including the upgrade of the Jomo Kenyatta International Airport (JKIA), following the collapse of the multi-billion Adani deals .
On Tuesday, President William Ruto had vowed to upgrade JKIA despite the termination of the deal with Adani Group.
"I want to assure Kenyans that a new airport will be constructed. Some people celebrated when the deal was cancelled, yet the airport roof is leaking and in a bad state. Other countries are building their airports, but we are opposing and celebrating,” President Ruto said during the groundbreaking ceremony for the Sh11 billion Devki iron ore pelletisation plant in Manga, Taita Taveta county.
“The critics don't have an alternative plan or proposal for this issue," President Ruto said.
The Head of State explained that the deal was cancelled because of legal restrictions that prevent the government from dealing with investors who face certain legal challenges.
On Wednesday, Prime Cabinet Secretary Musalia Mudavadi said that Kenya could tap into the financial potential of its diaspora community through a Sh500 billion Diaspora Bond to fund large-scale infrastructure projects, such as building a new airport terminal or facility at JKIA.
A Diaspora Bond is a financial instrument issued by a government targeting its citizens living abroad, enabling them to invest in their home country's development.
Mr Mudavadi, the Foreign and Diaspora Affairs Cabinet Secretary, suggested that Kenya is ready to leverage the trust and financial resources of its diaspora to undertake significant infrastructure projects.
By issuing such bonds, the government seeks to diversify its funding sources and reduce reliance on foreign loans or controversial deals like the recently collapsed Adani project.
This approach also aligns with the goal of strengthening economic ties between the diaspora and Kenya.
“Kenya is now ripe for a Diaspora bond that could fund huge infrastructural projects like building a new airport at Jomo Kenyatta International Airport (JKIA).
“The government could raise up to Sh500 billion from the Diaspora bond that can fund a complete overhaul of the international airport at about Sh300 billion and another Sh200 billion go into other huge infrastructural projects,” Mr Mudavadi said.
The PCS noted that Diaspora Bond had been exploited by other countries for their national projects and that the time was ripe for Kenya to do one for its cost-intensive projects.
“With Sh 500 billion that we can raise from the Diaspora, we can either build a new airport at Sh 260 billion to about Sh 300 Billion, or we can decide to expand a dual road to connect with Uganda or even extend the Standard Gauge Railways (SGR),” Mr Mudavadi said.
He further noted that the Indian Diaspora bond was over-subscribed 5 billion dollars a few years ago and Israel had raised up to 50 billion dollars over time to build their economy.
Mr Mudavadi pointed out that the government was working on a Diaspora Bond, with technical support from the World Bank’s Multilateral Investment Guarantee Agency (MIGA).
“This instrument will offer Kenyans abroad a secure investment while diversifying the source of financing for Government projects. While providing a competitive return on investment, the bond will help Kenya to systematically move away from costly foreign loans to support its infrastructure and other capital development projects,” he said.
He disclosed that the government’s focus on the diaspora was informed by their growing contribution to Kenya’s socio-economic development, mainly through remittances, investment, and knowledge transfer.
“In the first 10 months of this year, remittances increased to a record $4 billion (over Sh520 billion), which is a remarkable increase of 17.8 percent over the remittances of $3.46 billion received during the same period in 2023,” said Mr Mudavadi.
The PCS said the growth in remittances cemented their position as Kenya’s largest foreign exchange earner, delivering more than the combined earnings from coffee, tea, horticulture, and tourism.
“It also sets us on the pathway to growing remittances to one trillion shillings by 2027,” he said.
Mr Mudavadi noted that the youths in Kenya who were wondering why President Ruto was traveling across the world will now be able to understand the reason through the success of Diaspora remittances.
“Kenya does not live in isolation; we must always engage with the rest of the world. By 2027 we are even projecting a rise to Sh1 trillion in Diaspora remittances, this is money that has and will help us take up the value of shillings. The remittances alongside government interventions had brought down a dollar from Sh169 to now Sh129,” Mr Mudavadi said.
He noted that the government appreciated the sacrifices that Kenyans abroad make to dutifully send money home, directly impacting education, healthcare, small business enterprises, housing, gender equality, rural development, and poverty alleviation.
“We can enhance this contribution particularly if we reduce the cost of remitting money, from an average of six percent to the Sustainable Development Goals target of three percent. I wish to assure you that the Government will work with all stakeholders to align with the SDG's universal value of 'Leave No One Behind.' Our primary goal is to achieve inclusivity and deepen access to affordable digital remittance and financial services,” he said.
Another key focus of the government engagement, Mudavadi said was the engagement with the diaspora is the transfer of knowledge and skills that will enable the country to tap into initiatives that will support the Bottom-Up Economic Transformation Agenda priorities and Kenya Vision 2030.
He said President Ruto’s administration was also implementing the Global Labour Market Strategy to secure quality job placements for Kenyans abroad and was deliberate about engaging countries, through bilateral labour agreements and MOUs, to expand opportunities that will help empower Kenyans and particularly the youth.
“As we do this, we undertake to enhance our capacity to offer timely and effective consular services, ensuring that the rights of every Kenyan outside our borders are protected. I can confirm our readiness to do exactly this; the State Department for Diaspora Affairs has officers on call 24/7 to address the Kenyan diaspora issues and concerns,” said Mr Mudavadi.
Principal Secretary for the Diaspora Affairs state department, Roseline Njogu, said that there were more than four million Kenyans in the Diaspora and noted that they would still push for more Kenyans.
“Our interest is to ensure that we have more Kenyans across the world and that they are safe and going about their lives knowing that the government cares for every Kenyan life,” said Ms Njogu.
President Ruto announced the cancellation of the controversial Adani deals last month during his State of the Nation Address, saying the decision was based on credible evidence of corruption by the relevant authorities.
“I have stated in the past, and I reiterate today, that in the face of undisputed evidence or credible information on corruption, I will not hesitate to take decisive action,” the President said.
“Accordingly, I now direct - in furtherance of the principles enshrined in Article 10 of the Constitution on transparency and accountability, and based on new information provided by our investigative agencies and partner nations - that the procuring agencies within the Ministry of Transport and the Ministry of Energy and Petroleum immediately cancel the ongoing procurement process for the JKIA Expansion Public Private Partnership transaction, as well as the recently concluded Ketraco transmission line Public Private Partnership contract, and immediately commence the process of onboarding alternative partners,” he went on.
President Ruto, had been a leading defender of the multi-billion-shilling power transmission projects awarded to the Adani Group under the Public-Private Partnership (PPP) framework, urging Kenyans to embrace such initiatives.
The President emphasised that private sector financing would ease the tax burden and reduce dependence on loans.
On Tuesday, the Head of State expressed confidence in finding new investors to implement its infrastructural projects.
"We may have stopped the Adani deal, but that does not mean we will not upgrade the airport. I was confident he was going to build our airport and do a good job," he added.
President Ruto also highlighted the government's efforts to create a conducive environment for investors to spur economic growth.
He reiterated that the Vision 2030 economic pillar, which aims for a 10 percent annual economic growth rate as a minimum threshold for fulfilling the country's development agenda with the manufacturing sector, identified as a key contributor, is expected to play a significant role in this growth.
