Kenya to benefit from Sh1.29 trillion Afreximbank emergency fund

Cairo-based African Export-Import Bank (Afreximbank). [iStockphoto]

Kenya is set to benefit from a new $10 billion (Sh1.2 trillion) emergency facility launched by the African Export-Import Bank (Afreximbank) to cushion member states from the economic fallout of the escalating Middle East conflict.

This comes as the war drives up the cost of fuel, fertiliser and essential imports. 

The Gulf Crisis Response Programme (GCRP), approved by Afreximbank’s board and launched on March 31, aims to provide short-term foreign exchange and liquidity to vulnerable African and Caribbean nations, such as Kenya, whose economies have been battered by the conflict that escalated on February 28 this year.  

For Kenya, which relies heavily on imported fuel, wheat, edible oils and fertiliser, much of which passes through Gulf shipping corridors, the facility could offer a vital lifeline.  

The war in the Middle East has already pushed up shipping costs and fuel prices, contributing to a sharp acceleration in input cost inflation, according to a private sector survey released separately on Tuesday. 

“This crisis response programme is in tune with our DNA,” said Dr George Elombi, president and chairman of Afreximbank, while announcing the new fund.

“We understand how our economies work and the pain points associated with these transitory crises. The programme will support African countries in adjusting smoothly to the crisis while strengthening their resilience to future shocks.” 

The GCRP is designed to sustain essential imports, including fuel, liquefied natural gas, food, fertiliser and pharmaceuticals, by providing emergency foreign exchange. 

It also aims to help energy and mineral exporters scale up production to capitalise on elevated prices, while offering relief to tourism and aviation sectors hit by the crisis. 

Liquidity gaps

Kenya is a member of Afreximbank, which has its roots in supporting African trade and has previously rolled out emergency interventions, including a $4 billion (Sh521.1 billion) Ukraine crisis facility.

Under that earlier programme, the bank disbursed $39 billion (Sh5.07 trillion) across Africa to help countries bridge liquidity gaps and secure essential goods. 

The new Gulf facility comes at a critical time for Kenya.

Data released earlier on Tuesday showed the country’s private sector activity contracted in March for the first time in seven months, with businesses reporting weaker household spending, higher fuel and transport costs, and disruptions to international trade linked to the Middle East war. 

The Stanbic Bank Kenya Purchasing Managers’ Index fell to 47.7 in March from 50.4 in February, with firms citing “constrained customer spending, reduced cash circulation and tighter household budgets.”

Many also pointed to “higher taxes, rising fuel and transport costs and increased shipping expenses” linked to the conflict. 

Higher import costs and subdued domestic demand have put pressure on both households and businesses. 

Beyond emergency financing, Afreximbank said it will spearhead a coordinated regional response in partnership with the UN Economic Commission for Africa, the African Union Commission, the AfCFTA Secretariat and the Caribbean Community (CARICOM) to strengthen energy security, trade resilience and supply chain diversification. 

“The programme will support African countries in adjusting smoothly to the crisis while strengthening their resilience to future shocks through interventions that transform the structure of their economies,” Elombi added. 

For Kenya, access to the facility could help stabilise essential imports, ease foreign exchange pressures, and provide working capital to businesses struggling with higher costs.

The bank has a track record of rapid disbursements and has already begun partnerships with banks and corporates to secure fuel, fertiliser, and food supplies disrupted by the conflict. 

Analysts say Kenya’s ability to access the funds quickly will depend on presenting bankable projects and meeting the facility’s terms.

But with the war showing no signs of abating, the facility offers a rare buffer against external shocks for an economy already grappling with squeezed consumers and rising business costs, they said.