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| Development Bank of Kenya | |
|---|---|
| Name | Development Bank of Kenya |
| Type | Defunct |
| Industry | Banking |
| Fate | Liquidated |
| Founded | 1963 |
| Defunct | 2018 |
| Headquarters | Nairobi |
| Area served | Kenya |
Development Bank of Kenya was a Kenyan financial institution established in 1963 to provide long-term finance for industrial and agricultural projects. It operated alongside institutions such as Central Bank of Kenya, Kenya Commercial Bank, National Bank of Kenya, Equity Bank, and Standard Chartered Kenya before facing insolvency and liquidation. The bank engaged with development partners including the World Bank, African Development Bank, International Monetary Fund, and bilateral agencies like USAID and Department for International Development.
The bank was created at independence during the administration of Jomo Kenyatta and the Kenya African National Union government to implement industrial policy alongside entities such as the Industrial and Commercial Development Corporation and the Agricultural Development Corporation. Early patrons included ambassadors from United Kingdom, United States, and representatives of the United Nations who linked it to financing models used by the Development Bank of Singapore and the Industrial Development Bank of India. In the 1970s the institution financed projects comparable to those supported by East African Development Bank and collaborated with multinational firms such as Unilever and Fiat. During the structural adjustment era influenced by the International Monetary Fund and the World Bank in the 1980s and 1990s, it faced competition from private banks like Barclays Bank Kenya and policy shifts under administrations of Daniel arap Moi and later Mwai Kibaki. Regulatory changes by the Central Bank of Kenya and legislation debated in the Parliament of Kenya reshaped its mandate through the 2000s until its closure in the 2010s amid investigations involving the Ethics and Anti-Corruption Commission and insolvency proceedings in the High Court of Kenya.
Ownership structures involved shareholders such as state parastatals including the Kenya Industrial Estates and pension funds like the National Social Security Fund (Kenya), alongside private investors including entities similar to Kenya Airways and insurance firms like Britam. Board appointments reflected political oversight tied to cabinets led by Raila Odinga, Uhuru Kenyatta, and earlier ministers from the Ministry of Finance (Kenya). Governance interactions referenced legal frameworks such as the Companies Act (Kenya) and reporting obligations to the Capital Markets Authority (Kenya) and auditors akin to PricewaterhouseCoopers and KPMG. Leadership changes featured executives drawn from institutions including East African Breweries, Kenya Commercial Bank, and multinational banks like Citibank and Standard Chartered.
The bank offered term lending, project finance, syndicated loans, and advisory services resembling products at ICICI Bank and Development Bank of Japan. Client sectors encompassed manufacturing firms such as Bamburi Cement and Kenya Tea Development Agency, infrastructure projects linked to Kenya Railways and Kenya Power and Lighting Company, and agricultural enterprises tied to exporters like East African Tea Trading Association. It participated in cofinancing arrangements with the African Development Bank and export credit agencies similar to Export-Import Bank of India and provided technical assistance paralleling programs by the United Nations Development Programme. Risk management practices referenced instruments used by International Finance Corporation and European Investment Bank.
Financial metrics showed volatile capital adequacy and non-performing loan ratios influenced by macro shocks like the 1997 Kenyan crisis and global events such as the 2008 financial crisis. Audited statements mirrored issues observed at National Bank of Kenya and Imperial Bank (Kenya) prior to their distress: rising provisions, liquidity squeezes, and recapitalization needs addressed in part by stakeholders including World Bank advisers. Attempts at restructuring invoked receivership precedents from the Co-operative Bank of Kenya and legal remedies adjudicated in the High Court of Kenya. Credit ratings and investor confidence were monitored by agencies akin to Moody's and Standard & Poor's for comparable institutions.
The bank financed industrial parks, agro-processing plants, and energy projects that interacted with state-owned enterprises such as Kenya Pipeline Company and private groups like CIC Insurance Group. Projects supported export-oriented manufacturers servicing markets accessed via Port of Mombasa and regional initiatives linked to the East African Community and the Common Market for Eastern and Southern Africa. Its role mirrored development banks that catalyze infrastructure for telecommunications projects associated with companies such as Safaricom and transport projects impacting corridors used by Northern Corridor Transit and Transport Coordination Authority.
Investigations by anti-corruption agencies including the Ethics and Anti-Corruption Commission and parliamentary committees highlighted alleged governance lapses similar to cases at Imperial Bank (Kenya) and National Bank of Kenya. Critiques from civil society organizations such as Transparency International and academics from institutions like University of Nairobi focused on misallocation of funds, insider lending, and weak risk controls. Legal actions involved litigants appearing before the High Court of Kenya and scrutiny by the Office of the Auditor-General (Kenya), prompting debates in the Parliament of Kenya about state asset management and reforms advocated by think tanks like Africa Policy Research Institute.
Its liquidation and asset disposition invoked models used in restructurings of Kenya Commercial Bank subsidiaries and reform programs recommended by the World Bank and the International Monetary Fund. Successor arrangements explored transfer of viable loan portfolios to institutions such as Equity Bank and Co-operative Bank of Kenya, and proposals for a new development finance vehicle drew inspiration from entities like the African Development Bank and Development Bank of Southern Africa. Academic analyses at Strathmore University and policy papers by Institute of Economic Affairs (Kenya) evaluated lessons for development finance, governance, and state-owned enterprise reform.
Category:Banks of Kenya