AfDB flags several Kenyan projects for suspected graft

African Development Fund headquarters. [iStockphoto]

The African Development Bank (AfDB) wants to tighten oversight of its multibillion-dollar investments in local companies, the multilateral lender now says.

AfDB, which has funnelled tens of billions of shillings into Kenyan companies in the last decade, says most of the projects have been marred by several "implementation challenges" and require closer scrutiny.

"The bank's portfolio in the region is facing a number of challenges and requires close monitoring," said AfDB in internal documents seen by Standard Business.

"To achieve substantial reduction in its portfolio flagged in the bank's Portfolio Flashlight Report requires a close monitoring and follow-up of the portfolio in the RDGE (the African Development Bank's East Africa Regional Development and Business Delivery Office) countries."

Expressions of interest for a consultant to audit the identified projects are to be received by this week, AfDB said.

The announcement comes at a time nearly two dozen Kenya-based companies have been blacklisted by the World Bank and AfDB in under two years over corruption and quality concerns in projects funded by the multilateral lenders.

This has turned the spotlight on how local firms bid and clinch lucrative tenders with the two lenders.

Some of the series of high-profile companies banned by AfDB based in Kenya include Aerospace Aviation, Beta Trading Company, Global Interjapan (Kenya) Ltd, Eva-Top Agencies, Madujey Global Services, Mactebac Contractors Ltd, Techno Brain (Kenya) Ltd ("Techno Brain Kenya") and Sony Commercial Agencies.

Others include Inotec Co Ltd (Kenya Branch Office), Sino-Kenya Engineering Group Company Ltd, Rockey Africa Ltd, Reef Building Systems Ltd (Reef), Ultimate Engineering Ltd, Express Automation Ltd and Kenya Power contractor Chint Electric.

AfDB says the selected consultant will provide technical support "for country portfolio reviews as well as monitoring the recommendations of the Independent Evaluation Department (BDEV) and project audits."

"He/she will have mastery of the country/regional portfolio and will prepare portfolio information notes for Annual Meetings or any other meetings upon management's request," said the continental lender.

"The consultant will pay particular attention to projects flagged for implementation issues and assist in resolving the issues."

The AfDB has emerged as an important source of funding for local projects over the last decade.

A debarment or ban by AfDB or the World Bank also qualifies for cross-debarment by other multilateral development banks under the Agreement for Mutual Enforcement of Debarment Decisions.

These include the Asian Development Bank, the European Bank for Reconstruction and Development and the Inter-American Development Bank.

The financial institutions, which are mostly owned and financed by governments, have been keen to curb corruption in their projects, which run into billions of dollars annually.

The AfDB plans to lend Sh18.1 billion towards the construction of the Nairobi-Nakuru highway, being one of the 10 financiers of the project.

The funding represents about 10 per cent of the Sh180 billion required for the upgrade of the road.

The loan will be given to a consortium led by French infrastructure firm Vinci, which secured a 30-year concession contract in 2019 to build and operate the Nairobi-Nakuru highway.

The remaining cost of the project under the public-private partnership (PPP) model will be financed by the other 10 development financiers and institutions.