, NAIROBI, Kenya, Oct 9 – Kenya hopes to raise close to $1.5 billion in an ambitious international bond issue aimed at revamping crumbling colonial-era infrastructure and accelerating East Africa’s largest economy.
The hunt for liquidity from the global capital markets is central to government efforts to close an unhappy chapter marked by political instability, drought and the fall-out from the international financial crisis that conspired to push economic growth down to 1.5 percent.
Kenya’s economy has since recovered from the 2007-2008 election-related violence, and is protected to expand 5.6 percent in 2013. The government has now set its sights on double-digit growth within five years and middle-income status by 2030.
“We are optimistic the issuance will be overly subscribed,” Haron Sirima, deputy governor of Kenya’s Central Bank said last week on the sidelines of a International Monetary Fund conference on Kenya’s economic prospects.
The bond issue, planned for late November, would be the largest debut by a sub-Saharan African nation, and follows successful moves by Ghana, Rwanda and Zambia.
“African countries are taking advantage of these historically low rates,” said Kitili Mbathi, managing director for CfC Stanbic Holdings.
Carmen Altenkirch, an analyst for Fitch Ratings, said African nations also wanted to tap into renewed investor interest in Africa.
What started out as interest in natural resources “…over the past five years, this had muted also into Africa’s financial assets,” she said.
Antoinette Monsio Sayeh, Africa director at the International Monetary Fund, said she understood that the cash raised would go to paying off more expensive debt and “addressing infrastructure challenges”.
Kenya’s main port of Mombasa, congested roads and century-old railway link – which dates back to a time when Nairobi was little more than a railway depot – are all major bottlenecks to trade.
“We think Kenya is in a very good place,” Sayeh told reporters, describing investors as “very gung-ho on Kenya these days”.
She praised Kenya’s “sound monetary and fiscal policies” including steps to bring inflation down from 14 percent in 2011 to around 5 percent this year.
In a keynote speech, Kenyan President Uhuru Kenyatta admitted that a timid reduction in poverty rates, from 52 percent in 1997 to 46 percent in 2006, was “neither satisfactory nor compatible with our stated aim to become a middle-income country by 2030.”
He also said he wanted to see Kenya undergo an “industrial revolution to power our ambition of becoming a middle income country by 2030” — a formidable challenge for a mostly agrarian economy with a burgeoning youth population.