State Seeks New African Development Bank Funding to Unlock Energy and Infrastructure Growth

The State seeks new African Development Bank funding as Kenya’s National Treasury has formally approached the African Development Bank Group (AfDB) for additional financing to underpin key development priorities, deepening the country’s engagement with multilateral lenders amid a broader drive to accelerate infrastructure, power transmission, health and water projects.

State seeks new African Development Bank funding to anchor major development agendas

Kenya’s government is stepping up negotiations with the African Development Bank Group as part of a strategic effort to tap into fresh financing for several flagship programmes across critical sectors. During recent discussions held in Nairobi between AfDB officials and senior representatives of the National Treasury, Kenya’s Treasury Principal Secretary Dr Chris Kiptoo confirmed that the State has requested new funds in addition to the approximately USD 509 million (about Sh65.6 billion) already disbursed by the AfDB to support existing development projects.

The mid-term review of the Bank’s Country Strategy Paper for Kenya (2024–2028) formed the backdrop to the talks, with both sides assessing progress and identifying priority interventions requiring additional support. Key areas of focus highlighted by Dr Kiptoo include investments in power transmission networks, health sector improvements, enhancements to water infrastructure and ramping up the pace of project delivery to ensure better absorption of funds and impact on the ground.

This renewed push for AfDB resources comes as the government simultaneously recalibrates its wider financing framework. In recent months, Kenya issued a new eurobond and expanded its domestic borrowing targets — moves that form part of a broader strategy to balance immediate funding needs with long-term fiscal sustainability.

Analysts note that accessing AfDB financing provides a more favorable borrowing profile compared with commercial debt markets, thanks to the development lender’s concessional terms for growth-enabling sectors. “Securing multilateral financing like this not only helps bridge funding gaps for infrastructure and social services but also strengthens investor confidence by diversifying debt sources,” says Nairobi-based economic analyst Lydia Mwangi.

Budget pressures and AfDB role in Kenya’s financing mix

The context for the State’s request is Kenya’s ongoing effort to manage fiscal pressures while driving growth. With rising demand for infrastructure and public services, the government has been exploring a multi-layered financing strategy that includes tapping sovereign bond markets, expanding domestic Treasury bill issuance, and leveraging development partner funding alongside institutional private capital.

AfDB’s role has grown in recent years. Beyond the USD 509 million already provided, the Bank’s cumulative approvals to Kenya reportedly reached the equivalent of USD 606.2 million (Sh78.2 billion) in 2024, underscoring its position as a major development partner.

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Kenya’s engagement with the AfDB covers a range of sectors and projects — from road and power infrastructure to regional trade-enhancing corridors — and forms part of the government’s broader Vision 2030 development blueprint. However, the increasing reliance on debt financing has heightened scrutiny of project execution, debt sustainability and absorption capacity.

While the AfDB’s financing terms tend to be softer than commercial alternatives, repayments still factor into Kenya’s medium- to long-term debt obligations. The Treasury’s broader strategy is to secure a mix of concessional development financing, market-sourced capital and private investment to reduce financing volatility and spread risk.

The State’s renewed funding request also reflects a desire to accelerate key development work without placing undue pressure on domestic taxpayers. Treasury officials hope that new AfDB support will play a catalytic role, helping unlock complementary private and impact investment for high-priority projects.

As negotiations continue, the emphasis will likely remain on aligning funding with bankable project pipelines that meet both Kenya’s developmental objectives and AfDB’s lending criteria.