The visit to London by Kenya’s President, HE Uhuru Kenyatta, starting 27th July saw the announcement of a number of projects with which FSD Africa is proud to be involved.
President Kenyatta was welcomed by the UK’s Foreign Secretary Rt Hon Dominic Raab and the Lord Mayor of London, William Russell, to an event at the Mansion House, in the heart of the City of London, the UK’s financial hub.
The Nairobi International Financial Centre
One milestone that captured headlines was the announcement that Prudential, one of the UK’s most established insurance brands, is to join the new Nairobi International Financial Centre as one of its anchor clients.
For FSD Africa this represents the culmination of six years of work, starting in September 2015, during which we have facilitated the incubation of the NIFC providing financial and technical assistance on behalf of the UK government. We continue to provide support, including tax and strategic communications.
The aim of the NIFC is to position Kenya as a leading financial services centre in Africa attracting long-term, foreign investment to the country and the region, thereby delivering sustainable economic growth and creating jobs. It will also provide an important conduit for green finance which will be crucial to fund Africa’s efforts to combat the effects of climate change.
When financial firms come together working in proximity, there will be an exchange of ideas and technical expertise and we should expect financial markets to become more innovative and competitive, making it easier for those seeking capital to find it on more affordable terms.
Green, affordable housing
Another key announcement was the Kijani initiative, a partnership between FSD Africa Investments and the UK Climate Investments, through which the UK government is committing £35 million (Ksh 5.2 billion) to the development of green affordable housing in Kenya.
Kenya needs at least 250,000 new homes annually to meet the housing demand, yet only 50,000 new homes are built. The investment will help address this through a new 10-year locally managed fund which aims to deliver around 10,000 new green, affordable homes for low-income families.
Importantly it will also support the development of sustainable building as a new green asset class for local investors through a new housing market intelligence portal led by the Centre for Affordable Housing Finance in Africa, designed to provide housing finance investors with the data they need to make investment decisions.
Capital market development
President Kenyatta also referred to the support Kenya had received from the UK on bond market development and especially on green bonds. While there were no details on Kenya’s long-awaited sovereign green bond, we expect further announcements on this in the coming months.
The President referred in his speech to the importance of deepening the domestic debt market, improving pricing efficiency, and lowering the cost of credit in the economy. This echoed the Budget Statement in June 2021 which confirmed plans to set up an Over-the-Counter secondary market platform for Government securities, to be in place by June 2022.
FSD Africa has been instrumental in the development of Kenya’s green bond market, through the Kenya Green Bond Programme, and of the OTC exchange.
Both these projects have been a long time in development and are a good demonstration of FSD Africa’s “patient capital” approach. To bring about change, at scale, in financial markets takes time and depends on good ideas allied with technical ability, a collaborative approach and the development of good relationships with partners across the sector.
We thank the governments of the UK and Kenya for their support and look forward to more good news in the future.