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Kenya explores Sh500bn diaspora bond for JKIA revamp after Adani setback
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 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. He was speaking during Diaspora day at Kenyatta International Convention Centre (KICC). 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. 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.
