Report On The Consideration Of The Ratification Of The Agreement Establishing The European Bank Reconstruction And Development

REPUBLICOFKENYA THENATIONALASSEMBLY

THIRTEENTHPARLIAMENT-FOURTHSESSION-2025 DEPARTMENTALCOMMITTEEONFINANCEANDNATIONAL PLANNING

REPORTON:

THECONSIDERATIONOFTHERATIFICATIONOFTHEAGREEMENT ESTABLISHINGTHEEUROPEANBANKFORRECONSTRUCTIONAND DEVELOPMENT(EBRD)

JUNE,2025

TABLEOFCONTENTS

| LISTOFABBREVIATIONS | LISTOFABBREVIATIONS | LISTOFABBREVIATIONS | 1 | |----------------------------|---------------------------------------------|---------------------------------------------|-----------------------------| | CHAPTERONE | CHAPTERONE | CHAPTERONE | CHAPTERONE | | 1.0 | PREFACE | PREFACE | PREFACE | | 1.1 | ESTABLISHMENTOFTHECOMMITTEE | ESTABLISHMENTOFTHECOMMITTEE | ESTABLISHMENTOFTHECOMMITTEE | | 1.2 | MANDATE OF THE COMMITTEE | MANDATE OF THE COMMITTEE | MANDATE OF THE COMMITTEE | | 1.3 | COMMITTEEMEMBERSHIP | COMMITTEEMEMBERSHIP | 6 | | 1.4 | COMMITTEESECRETARIAT | COMMITTEESECRETARIAT | 7 | | PARTII | PARTII | PARTII | 8 | | 2.0 | | | | | PARTIII | PARTIII | PARTIII | PARTIII | | | | | 16 | | 3.0 | PUBLICPARTICIPATION/STAKEHOLDERCONSULTATION | PUBLICPARTICIPATION/STAKEHOLDERCONSULTATION | 16 | | 3.1.1 | 3.1.1 | CALLFORMEMORANDAFROMTHEPUBLIC | 16 | | 3.1.2 | 3.1.2 | THENATIONALTREASURY. | 16 | | 3.1.3 | 3.1.3 | MINISTRYOFFOREIGNANDDIASPORAAFFAIRS. 19 | | | PARTIV | PARTIV | PARTIV | 21 | | 4.0COMMITTEEOBSERVATIONS | 4.0COMMITTEEOBSERVATIONS | 4.0COMMITTEEOBSERVATIONS | 21 | | PARTV | PARTV | PARTV | 22 | | 5.0COMMITTEERECOMMENDATION | 5.0COMMITTEERECOMMENDATION | 5.0COMMITTEERECOMMENDATION | 22 |

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LISTOFABBREVIATIONS

EBRD

EuropeanBankforReconstructionandDevelopment

MFA

MinistryofForeignandDiasporaAffairs

ANNEXURES

Annexure I: Signed list of Members who attended the sitting which considered and adopted theReport

Annexure2:AdoptionMinutes

Annexure 3: Copy of newspaper advertisement on public participation and submission of memoranda

CHAIRPERSON'SFOREWORD

This report details the considerationby theDepartmental Committee on Finance and National Planning on its consideration of the Agreement Establishing the European Bank for Reconstruction and Development. EBRD is owned by seventy one (7l) countries on five continents, the European Union (EU) and the European Investment Bank (EIB).

The2023Annual General MeetinginUzbekistan,theBoardof Governorsof EBRDvoted for the limited and incremental expansion of its operations into sub-Saharan Africa. The decision reflected the growing economic links between countries where the Bank has invested in Sub-Saharan Africa and the potential for developing private sector there. Following the decision of the Annual General Meeting, the EBRD will invest,for the first time, in up to six sub-Saharan African Countries from 2025. Based on EBRD's mandate and business model, Kenya is among the six countries identified for investment. The other countries are Benin, Cote d'lvoire,Ghana,Nigeria and Senegal.

Secretaryfor Foreign and DiasporaAffairs submitted theParliamentary Memorandum on Kenya's Accession of the Agreement Establishing European Bank for Reconstruction and DevelopmenttotheSpeakerofNationalAssembly,laidontheTableoftheHouseand committed to the Committee in line with Standing Order I70A(l).

The Agreement aims to foster the transition towards open market-oriented economies the principles of multiparty democracy, pluralism and market economies.

In considering the Treaty, the Committee pursuant to Article ll8(l)(b) of the Attorney General and Ministry of Foreign Affairs on 24th June, 2025 in Trademark, Nairobi. The Committee also placed advertisements in two local dailies on I3th May 2025,callingforsubmissionsof memorandaonthesubjectmatter.

Having considered the Agreement and analyzed the submissions made, the Committee observed that the Agreement aligns with Kenya's constitutional values, and its ratification doesnotnecessitateamendmentstotheConstitutionorexistinglaws.

Having examined the Kenya's Accession of the Agreement Establishing the European Bank for Reconstruction and Development against the Constitution, the Treaty Making and Ratification Act (Cap 4D) and Standing Order I70A of the National Assembly Standing Orders,the Committee recommends that the House adopts this report and APPROVES the ratification of the Agreement for Establishing the European Bank for ReconstructionandDevelopment.

Pursuant to Standing Orders 199(6) and 170A (4) it is my pleasant duty to present to the

pg.3 ESTABLISHINGTHE EUROPEANBANKFORRECONSTRUCTIONAND DEVELOPMENT(EBRD)

itsconsiderationof the Agreement for theEstablishment of theAfrica Finance Corporation.

Hon. CPA Kuria Kimani, CBS, M.P.

Chairperson, Departmental Committee on Finance and National Planning.

1.0PREFACE

I.IESTABLISHMENTOFTHECOMMITTEE

• I.The Departmental Committee on Finance and National Planning is established under StandingOrder216(5)andwhosemandateisasfollows:
• i. Toinvestigate,inquireinto,andreport onall mattersrelating tothe mandate, management,activities,administration,operations and estimates oftheassigned ministries and departments;
• ii. Tostudy theprogramandpolicyobjectivesofMinistries anddepartments andthe effectiveness of theirimplementation;
• ii. To study andreviewall thelegislationreferredtoit;
• iv. To study,assess,and analyze the relative success of theMinistries and departments as measured by theresults obtained ascomparedwith their stated objectives;
• V. To investigate and inquire into all matters relating to the assigned Ministries and departments as they may deem necessary, and as may be referred to them by the House;
• vi. Tovetandreporton all appointmentswhere theConstitutionorany lawrequiresthe National Assembly to approve, except those under Standing Order No. 204 (Committee on Appointments);
• vi. To examine treaties, agreements and conventions;
• viii. To make reports and recommendations to the House as often as possible, including recommendationofproposedlegislation;
• ix. ToconsiderreportsofCommissionsandIndependentOfficessubmittedtotheHouse pursuanttotheprovisionsofArticle254oftheConstitutionand
• x.To examine any questions raised by Members on a matter within its mandate.

I.2MANDATEOFTHECOMMITTEE

• 2.In accordance with the Second Schedule of the Standing Orders, the Committee is mandated to consider public finance, monetary policies, public debt, financial pricing policies, banking, insurance, population revenue policies including taxation and national planning and development.

3. In executing its mandate, the Committee oversees the following government Ministries and Departments:

• ii. State Department for Economic Planning;
• i. The National Treasury;
• ili.
• iv. Commission on Revenue Allocation;and
• V. Office of the Controller of Budget.

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REPORTONTHECONSIDERATIONOFTHERATIFICATIONOFTHEAGREEMENT ESTABLISHINGTHEEUROPEANBANKFORRECONSTRUCTIONAND DEVELOPMENT(EBRD)

CHAPTERONE

I.3COMMITTEEMEMBERSHIP

• 4.The Departmental Committee on Finance and National Planning comprises the following Members:

Chairperson

Hon.CPA.Kuria Kimani, CBS, MP Molo Constituency UDA Party

Vice-Chairperson

Hon. (Amb). Benjamin Langat, CBS, MP Ainamoi Constituency

UDA Party

Hon.Peter Kaluma, CBS,MP Homa Bay Town Constituency ODM Party

Hon.Andrew Okuome,MP Karachuonyo Constituency ODM Party

Hon.David MwalikaMboni,MP Kitui Rural Constituency Wiper Party

Hon. CPA. Joseph Oyula, MP Butula Constituency

ODM Party

Hon.Dr.JohnArikoNamoit,MP Turkana South Constituency ODM Party

Hon. Umul Ker Kassim, MP Mandera County

UDA Party

Hon. CPA. Julius Rutto, MP Kesses Constituency UDA Party

Hon. (Dr.) Shadrack Ithinji, MP South Imenti Constituency Jubilee Party

Hon. Paul K. Biego, MP Chesumei Constituency UDA Party

Hon. Chiforomodo, Munga, MP Lunga Lunga Constituency UDM Party

Hon. Betty N. Maina, MP Murang'a County UDA Party

Hon. Mohamed S. Machele, MP Mvita Constituency ODM Party

Hon. George Sunkuyia, MP Kajiado West Constituency UDA Party

I.4COMMITTEESECRETARIAT

• 5.Thefollowingstaff facilitatetheCommittee:

Mr. Benjamin Magut

Principal ClerkAssistant Il/Head of Secretariat

Ms. Jennifer Ndeto

Mr.Salem Lorot

Deputy/D,LegalService

Legal Counsel I

Mr. James M. Macharia

Ms.PeninnahSimiren

MediaRelationsOfficer I

Legal Counsel II

Ms.Winfred Kambua

Mr. George Ndenjeshe

ClerkAssistantII

Fiscal Analyst II

Mr.Benson Kamande,

Ms.Nelly W.N.Ondieki

Clerk AssistantIlI

Research Officer III

Mr.Benson Muthuri

Ms. Joyce Wachera

Serjeant-At-Arms

Hansard Officer Il

Mr. Mwangi Muchiri Audio OfficerIl

PARTII

2.OBACKGROUNDTOTHETREATYESTABLISHINGTHEEUROPEANBANK FORRECONSTRUCTIONANDDEVELOPMENT

• 6.The Committee has received the Agreement Establishing European Bank for the European Bank for Reconstruction and Development(EBRD), also referred to as theAEB,istheEBRD'sTreaty.

7. The AEB was signed in Paris by founding members on 29 May, 1990 and entered into forced on 28 March 1991. Following an Inaugural Meeting held in London from 15 to 17April 199l,theBoard of Governors adoptedResolutionNo.8,authorizing theBank to commence operations. 8. The AEB is the main document of the EBRD and sets out the governance principles of theBank.TheEBRDisamultilateraldevelopmentbankwithitsHeadquartersin London that promotes sustainable private sector-led economies in Central and Eastern Europe,Central Asia,and theSouthernandEasternMediterranean.

• 9.The mandate of EBRD is "to foster the transition towards open market-oriented committed to applying the principles of multiparty democracy, pluralism and market economies".
• I0.Inits2023AnnualGeneralMeetinginUzbekistan,theBoardofGovernorsofEBRD Africa.The decision reflected the growing economic links between countries where theBankhasinvestedinSub-SaharanAfricaandthepotentialfordevelopingprivate sector there.
• I1.Following the decision of the Annual General Meeting,the EBRDwill invest,for the firsttime,inuptosixsub-SaharanAfricanCountriesfrom2025.BasedonEBRD's mandate and business model, Kenya is among the six countries identified for investment. The other countries are Benin, Cote d'lvoire, Ghana, Nigeria and Senegal.
• I2. EBRD is owned by 7l countries on five continents, the European Union (EU) and the EuropeanInvestmentBank(EiB).
• I3. EBRD imposes the following obligations to Member States:
• Eachmembershallsubscribetosharesof thecapital stockof theBank;

REPORTONTHECONSIDERATIONOFTHERATIFICATIONOFTHEAGREEMENT ESTABLISHINGTHEEUROPEANBANKFORRECONSTRUCTIONAND DEVELOPMENT(EBRD)

• (i) Thevoting powerof eachmembershallbeequaltothe number ofits subscribedsharesinthecapital stockoftheBank;
• (i) Each member shall berepresented on theBoard of Governors and shall appoint onegovernor andone alternate;
• (iv) structural reforms that promote liberalization, privatization, and economic diversification.
• I4. Kenya's membership was approved by Cabinet during its meeting held on I4th February, 2024. Kenya will be required to pay subscription of 203 shares, of which
• . 37are paid-upshares witha totalcost of EUR 370,000 (Approx. Kshs.61,162,406.00@165.30-CBKrateon17/11/2023)
• I66sharesarecallable

15. The Treaty Making and Ratification Act, 2012 (the Act) is the legal framework giving andratificationof treaties.Article2(6)provides that——

"Any treaty or convention ratified by Kenya shall form part of the law of Kenya under this Constitution."

• I6.Section 7 of the Act provides that where the Government intends to ratify a treaty, the CabinetSecretary of the relevantState department shall,in consultationwith the Attorney-General, submit to the Cabinet the treaty, together with a memorandum outlining several things including the objects and subject matter of the treaty.

PROVISIONSOFTHEAGREEMENT

17. The Agreement contains 20 chapters and 63 articles.

Chapter I: Purpose, functions and membership

ArticleI:Purpose

• I8. The Bank aims to help Central and Eastern European countries transition to market in countries committed to multiparty democracy and market reform.

Article2:Functions

19. The article lists how the Bank will fulfill its mission—by financing private sector development, mobilizing capital, and supporting reforms. It provides for the following measures: 2. (i) to promote, through private and other interested investors, the establishment, improvement and expansionofproductive,competitive and private sector activity, in particular small and medium-sized enterprises;

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ESTABLISHINGTHEEUROPEANBANKFORRECONSTRUCTIONAND DEVELOPMENT(EBRD)

• (ili)to foster productive investment, including in the service and financial sectors, entrepreneurial initiatives, thereby assisting inmakingacompetitive environment and raising productivity, the standard of living and conditions of labour;
• (iv)to provide technical assistance for the preparation, financing and implementation of relevant projects, whether individual or in the context of specificinvestment programmes;
• (vi)to give support to sound and economically viable projects involving more than onerecipientmember country;
• (vii) to promote in the full range of its activities environmentally sound and sustainabledevelopment;and
• (vili)to undertake such other activities and provide such other services as may further these functions.
• 20.TheArticlefurtherprovides thattheBankshallworkinclosecooperationwith all its members and, in such manner as it may deem appropriate within the terms of this Agreement, with the International Monetary Fund, the International Bank for Reconstruction and Development, the International Finance Corporation, the Multilateral Investment Guarantee Agency, and the Organisation for Economic Co-operationandDevelopment,andshallcooperatewiththeUnited Nations andits Specialized Agencies and other related bodies, and any entity, whether public or private, concernedwiththeeconomicdevelopmentof,andinvestmentin,Central andEastern European countries.

Article3:Membership

• 21.The Article provides that membership is open to IMF member countries(European and non-European), the EU, and the EIB (European Investment Bank). Countries apply and require 2/3 majority vote of the Governors for approval.

Chapter Il: Capital

Article4:AuthorizedCapitalStock

• 22.The Article sets theinitialcapitalat l0 billion,divided into shares.Members subscribe to shares,somepaid-in and some callable.

Article5:SubscriptionofShares

• 23.The Article defines how shares are distributed among members. Subscription proportions are maintained to protect EU majority control.

Article6:PaymentofSubscriptions

24. The Article details payment terms (5 yearly installments, half can be promissory

REPORTONTHECONSIDERATIONOFTHERATIFICATIONOFTHEAGREEMENT ESTABLISHINGTHEEUROPEANBANKFORRECONSTRUCTIONAND DEVELOPMENT(EBRD)

Article7:OrdinaryCapitalResources

• 25.The Article defines the Bank's financial resources (paid-in capital, borrowings, income). It ensures separation from donor (special) funds.

Chapter Ill: Operations

Article8:RecipientCountriesand UseofResources

• 26.TheArticleprovides that theBank'sresources areusedonlyincountries transitioning toward market economies and democracy. Support may be suspended if a country regresses.

HowIt Operates:

• i. Countries must take concrete steps towards democracy and market reform.
• ii. The Bank may limit or suspend access if a country violates these principles.
• ili. New members may request limited access for three years,tied to their contribution.

Article9:OrdinaryandSpecialOperations

• 9.The Article provides that the Bank has two types of operations:
• i.Ordinary operations (from capital contributions and income).
• il. Special operations (from donor-provided Special Funds).

HowItOperates:

• i. Ordinary operations are core activities funded by capital stock and income.
• ii. countries.

ArticleIo:SeparationofOperations

27. The Article provides that Ordinary and Special operations must be financially and operationallyseparate.

HowIt Operates:

• Separate accounting and reporting systems.
• ii. Nocross-subsidizationbetweenordinary andspecialfunds.
• ii. Expenses must be attributed properly.

ArticleIl:MethodsofOperation

28. The Article provides for how the Bank conducts its financing, including loans, equity,

How It Operates:

• i.Invests in or lends to both private firms and state-owned firms transitioning to private control.

pg. 11

ESTABLISHINGTHEEUROPEANBANKFORRECONSTRUCTIONAND DEVELOPMENT(EBRD)

• ii. Can underwrite securities, provide guarantees, and give technical help.

2. ili.Not more than 40% of operations may support the state sector.

ArticleI2:LimitationsonOrdinaryOperations

• 29.The Article sets prudential limits to ensure the Bank remains financially sound and avoids overexposure.

How It Operates:

• i. Cannotexceeditscapitalbaseinoutstandingoperations.
• ii. Limits on how much equity it can hold and prohibits controlling stakes.
• ili. No export credit guarantees or insurance business.

ArticleI3:OperatingPrinciples

• andeffectiveinvestment.

HowIt Operates:

• i.Projects must follow sound banking principles and avoid political bias.
• ii. The Bank avoids over-concentrating resources in one country or sector.
• ili. Investment proposals must undergo staff review and be documented.
• iv. The Bank avoids financing projects that could be done on reasonable terms by others.

ArticleI4:TermsandConditionsforLoansandGuarantees

• 3I.TheArticle provides that all loans andguarantees musthave clearly defined terms and protect the Bank's income.

HowIt Operates:

• i. Sets loan interest, fees, currencies, and maturity terms.
• i. Loans to state enterprises may require a government guarantee.

ArticleI5:CommissionandFees

• 32.The Article provides that the Bank charges commissions and fees for loans, guarantees, and underwriting.

HowItOperates:

• i. Fees compensate for risks.

2. ii.The Board of Directors sets the rates.

ArticleI6:SpecialReserve

• 33.TheArticleprovidesthatcommissions and fees are setasidein a special reserveto absorbfuturelosses.

How It Operates:

pg. 12

REPORTONTHECONSIDERATIONOFTHERATIFICATIONOFTHEAGREEMENT ESTABLISHINGTHE EUROPEANBANKFORRECONSTRUCTIONAND DEVELOPMENT(EBRD)

• i. Reserve is kept in liquid form and can be reclassified as income if surplus is large enough.

Article I7:Methods of Meeting the Losses of the Bank

34.The Article describes the step-by-step process for covering losses.

How It Operates:

• i. Provisions
• ii. Net income
• ili. Special reserve
• iv. Generalreserve
• v. Paid-in capital
• vi. Finally, call on callable capital

ArticleI8:SpecialFunds

• 35.TheArticleprovidesthat theBankcan accept and manage donor-fundedSpecial Funds that alignwith itsmandate.

How It Operates:

• i. Costs must be charged to the fund and Non-recipient countries can temporarily access funds if qualified.

ArticleI9:SpecialFundsResources

• 36.TheArticledefineswhatconstitutesSpecial Fundsresources.

HowItOperates:

• i.Includes donor contributions, income, and repayments and these resources must be tracked and reported separately.

ChapterIV:Borrowing and MiscellaneousPowers Article20:GeneralPowers

• 37.The Article grants the Bank authority to borrow funds,invest reserves,issue and guaranteesecurities,andprovide technical advice.

How It Operates:

• i. that member's currency.
• ii. The Bank may engage in underwriting and sell or buy back its securities.
• iii. It canadvisegovernmentsandenterprises.

ChapterV:Currencies

Article2l:DeterminationandUseofCurrencies

• 38.TheArticleseeks toensure theBankcanfreelyuse,receive,andtransfercurrencies related to its operations.

How It Operates:

• i.Convertible currencies are determined by the Bank, consulting IMF as needed.
• i.MembersmaynotrestricttheBank'saccessormovementofcurrencies.

pg. 13

ESTABLISHINGTHE EUROPEANBANKFORRECONSTRUCTIONAND DEVELOPMENT(EBRD)

Chapter Vl: Organization and Management

Article 22-36:These articles define the internal governance structure of the EBRD.

Article 22:Structure

• 39.TheArticleprovidesthattheBankconsistsofaBoardof Governors,Boardof Directors,President,Vice Presidents,and staff.

Article23-25:BoardofGovernors

• 40.Articles 23-25 provide for theBoard of Governors.

HowItOperates:

• i. Each member appoints one Governor and one Alternate.
• ii. Holds final authority on critical issues like capital increases and membership decisions.

3. iii.Meets at least annually.

Article26-28:BoardofDirectors

• 41.Articles26-28providesfor23Directorswhorepresentdifferentconstituencies and manage dailyoperations.

How It Operates:

• i. Oversees loans, technical assistance, guarantees, and strategy.
• ii. countries.

Article 29:Voting

42. Article 29 provides for voting.

HowIt Operates:

• i.Voting power is proportional to shares held.
• ii. Unpaid capital obligations reduce voting rights.

Article 30-36: Presidential powers, transparency, and income use

43. The salient points in Articles 30-36 are the following: 2. i.The President is elected for 4 years, cannot vote (except as tiebreaker).

• ii. The Bankmust publish quarterly financials and environmental impact reports.
• ili. Surpluses are allocated or distributed based on Board decisions.

5. 44.The Article provides that a member may leave the Bank by notifying 6 months in advance.

ChapterVll:Membershipand Termination Article37:RighttoWithdraw

Article 38:Suspension of Membership

pg. 14

REPORTONTHECONSIDERATIONOFTHERATIFICATIONOFTHEAGREEMENT ESTABLISHINGTHEEUROPEANBANKFORRECONSTRUCTIONAND DEVELOPMENT(EBRD)

45. The Article provides that a member violating obligations may be suspended and expelledifnotreinstatedwithinoneyear.

Article39-40:Settlements & Emergency Suspension

• 46.Articles39 and 40provideforsettlementof accountswithformermembers and

How It Operates:

• i. Exitingmembersremainliableforpre-exitobligations.

2. ii.

Article41-43:TerminationofOperations

• 47.The Articles provide that dissolution needs 2/3vote.Assets are to be distributed only afteralldebtsarecleared.

s Article44-55:InstitutionalProtections

• 48.TheArticlesprovidethatEBRDisimmunefromlawsuits(exceptunderexplicit terms),asset seizures,and taxation.Further,all Governors,Directors,Alternates, officers and employees of the Bank and experts of the Bank performing missions for theBankenjoylegalimmunitiesforofficialacts.

ChapterIX:Amendments,Interpretation,Arbitration

Article56:Amendments

• 49.The Articleprovides that amendment to the Agreement needs approval of3/ of members with 4/5 of voting power; some require unanimity (e.g., on rights to withdraw).

Article57:InterpretationandApplication

• 50.TheArticleprovides that disputes oninterpretationof the Agreement are tobe submittedtotheBoardofDirectors.MemberscanappealtotheBoardofGovernors.

Article58:Arbitration

• 51.TheArticleprovidesthatdisputeswithformermembersaretobesubmittedtoa3person tribunal (one picked by each party, one by the ICj President).

Article59:Implied Approval

• 52.TheArticleprovidesthatifamemberdoesn'tobjectintimebeforeanyactmaybe donebytheBank,approvalofcertainactionsisassumed.

ChapterX:Final Provisions

Articles60-63:EntryintoForceandRatification

53. The Articles provides for how states join the Bank, ratify the agreement, and deposit instruments.

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REPORTONTHECONSIDERATIONOFTHERATIFICATIONOFTHEAGREEMENT ESTABLISHINGTHEEUROPEANBANKFORRECONSTRUCTIONAND DEVELOPMENT(EBRD)

PARTIII

3.0PUBLICPARTICIPATION/STAKEHOLDERCONSULTATION

3.I.ICALLFORMEMORANDAFROMTHEPUBLIC

54. Pursuant to Article Il8(l)(b) of the Constitution on Public Participation and Section 8(3)of the Treaty Making andRatificationAct, 20l2,theCommittee placed advertisements in the local dailies, on 13th May 2025 calling for submissions of memoranda on the subject matter.By the close of the deadline, the Committee Affairs.

3.1.2THENATIONALTREASURY

• 55.The National Treasury submitted that,the EBRD Board of Governors adopted
• 56.EBRD is a multilateral development bank with its Headquarters in London, promoting sustainable, private sector-led economies in Central and Eastern Europe, Central Asia, andtheSouthernandEasternMediterranean.
• 57.The mandate of EBRD is "to foster the transition towards open market-oriented committed to applying the principles of multiparty democracy, pluralism and market economies".
• 58.Inits2023AnnualGeneralMeetinginUzbekistan,theBoardofGovernorsofEBRD votedfor thelimited andincrementalexpansionof its operationsintosub-Saharan Africa. The decision reflected the growing economic links between Countries where sectorin theregion.
• 59.Following the decision of the Annual General Meeting, EBRD will invest, for the first time,inuptosixsub-SaharanAfricanCountriesfrom2025.BasedonEBRD's mandate and business model, Kenya is among the six countries identified for investment. The other countries are Benin, Cote d'lvoire, Ghana, Nigeria and Senegal

GOVERNANCEANDSHAREHOLDINGSTRUCTURE

60. The National Treasury submitted that, the governance and shareholding structure of EBRD is as follows: 2. i.Inclusivegovernance 3. i.Growing membership 61. EBRD is owned by seventy one (7l) countries on five continents, the European Union are recent members. Additionally, the shareholders have approved the membership of

REPORTONTHECONSIDERATIONOFTHERATIFICATIONOFTHEAGREEMENT ESTABLISHINGTHE EEUROPEANBANKFORRECONSTRUCTIONAND DEVELOPMENT(EBRD)

Iraq. The founding treaty stipulates that the EU member states, the EU and the EIB mustholdmostof theBank'sshares.Notably,theUnitedStatesofAmericaisthe Bank's largest shareholder.

• 62.Each shareholder is represented individually on the EBRD's Board of Governors

RATIONALEFORTHEAGREEMENT

• 63.TheNational Treasuryhighlighted that themandateandgoalsof EBRDare closely aligned with the Bottom-up Economic Transformation Agenda (BETA) and four of its five core pillars, namely:
• i.Agriculture;
• iii. Healthcare, and
• ii.Micro, Small and Medium Enterprise (MSME) economy;
• iv.Digital Superhighway and Creative Economy.

IMPACTOFTHEAGREEMENT

• 64.The National Treasury and Economic Planning noted that the EBRD strategy for supporting the economy is in three cross-cutting themes,
• i.Accelerating the digital transition;
• ii. Transitioning to a green, low-carbon economy, and
• Access to employment, Skills training, Finance and E Entrepreneurship
• 65.Further, EBRD will bring on board the following expertise:
• i.Strengthening entrepreneurship and the role of SMEs;
• ii.Promoting private sector-led infrastructure and sub-sovereign lending, for example, by commercialising and privatising state-owned enterprises (SOES);
• regulators, investments in new financial instruments and targeted technical cooperation;
• iv. Furthering the transition to universal and sustainable energy by combining public and private sector work focusing on the green economy; and
• v.Adding value to agribusiness as a leading investor.

pg.17

REPORTONTHECONSIDERATIONOFTHERATIFICATIONOFTHEAGREEMENT ESTABLISHINGTHEEUROPEANBANKFORRECONSTRUCTIONAND DEVELOPMENT(EBRD)

66. The membership to EBRD will have linkages with the following ten (lo) Ministries

• i. MinistryofEnergyandPetroleum
• ii. Ministry of Environment, Climate Change and Forestry
• ili. Ministry of Co-operatives and Micro, Small and Medium Enterprises (MSME)Development
• iv. Ministry of Investments, Trade and Industry
• V. Ministry of Agriculture and Livestock Development
• vi. MinistryofRoadsandTransport
• vii. Ministry of Information, Communications and The Digital Economy
• vii. MinistryofYouthAffairsandSports
• ix. The Ministry of Gender,Culture, the Arts and Heritage
• X. Ministry of East African Community, The ASALS & Regional Development

IMPLEMENTATIONPLAN

67. The National Treasury and Economic Planning will submit the signed Instrument of AccessionandInstrumentofSubscription. 2. 68.The EBRD Management will complete the Country Technical Assessment Report. EBRDcarriedouttheCountryAssessment intheweekof 9 to13 June2025. 69. The Attorney General will submit a Legal Opinion in the format prescribed by EBRD 4. 70.TheEBRDBoardofDirectorswillgrantthemembershipbeforetheirsummerrecess, whichmakesitessential thatall theConditionsPrecedentarecompletedbeforethe endofJune2025. 5. 71.Subject to the EBRD Board of Directors, the Republic of Kenya and EBRD conclude a Resident Office Agreement allowing the Bank to establish Resident Offices in Kenya.

LEGISLATIONANDREGULATORYPLAN

• 72.A Legal Opinion in a form that is satisfactory to the Bank and that confirms the membershipInstruments have been adopted in compliance with the laws of the Republic of Kenya is a Condition Precedent,

FINANCIALIMPACTOFTHEAGGREMENT

• 73.The minimum subscription, which will be the initial subscription, is 203 shares, of which:37 are paid-up shares with a total cost of EUR 370,000 (Approx.Kshs. 55,053,558@148.7934-CBKrateon23/06/25).166sharesarecallable.

3.I.3MINISTRYOFFOREIGNANDDIASPORAAFFAIRS

The Ministry of Foreign and Diaspora Affairs MFA submitted as follows;

• 74.TheEBRDisamultilateraldevelopmentbankwithitsHeadquartersinLondonthat promotes sustainable private sector-led economies in Central and Eastern Europe, Central Asia,and theSouthern and Eastern Mediterranean.
• committed to applying the principles of multiparty democracy, pluralism and market economies".

76. The Agreement Establishing the European Bank for Reconstruction and Development (EBRD), also referred to as the AEB, is the EBRD's Treaty. 77. The AEB was signed by founding members in May I990 and entered into force on 28 March1991. 78. The AEB is the main document of the EBRD and sets out the governance principles of the Bank.

• 79.Inits2023AnnualGeneralMeetinginUzbekistan,theBoardofGovernorsofEBRD voted for the limited and incremental expansion of its operations into sub-Saharan Africa.
• 80.FollowingthedecisionoftheAnnualGeneralMeeting,theEBRDwillinvest,forthe firsttime,inuptosixsub-SaharanAfricanCountriesfrom2025.BasedonEBRD's mandate and business model, Kenya is among the six countries identified for investment. The other countries are Benin, Cote d'lvoire, Ghana, Nigeria and Senegal.

THEPATHTOEBRDMEMBERSHIP

• status to the European Bank for Reconstruction and Development (EBRD) on I4TH February 2024.

82. Following this approval, the Cabinet Secretary for the National Treasury and Economic Planning formally submitted Kenya's membership application. 83. On 16th May, 2024 the EBRD Board of Governors adopted Resolution 27l granting Kenya's membership to the EBRD.

• 84.However,in order to finalize membership to the EBRD, the EBRD Board of Governors stipulatedthatKenyamustmeetthefollowing ConditionsPrecedent to membershipby31stMay2025:
• pg. 19

REPORTONTHECONSIDERATIONOFTHERATIFICATIONOFTHEAGREEMENT ESTABLISHINGTHEEUROPEANBANKFORRECONSTRUCTIONAND DEVELOPMENT(EBRD)

• i.SubmitanInstrumentofAccession toconfirmthatthecountryaccedesto theAgreementEstablishing (AEB)and accepts the conditions of membership
• ii.SubmitanInstrumentofSubscriptiontoconfirmthatthecountry subscribes toboth the paid in shares and callable shares,
• i.Submit aLegal Opinion that confirms that the aboveinstruments are legal according toKenya law,and that all necessary measures required under the lawhavebeentakenfortheaccessiontotheAEBand
• iv.Transfer the sum for the paid in portion of the shares amounting to EUR 370,000 for the 37 paid-in shares.

LEGALPROVISIONS

• 85.Pursuant to the Treaty Making and Ratification Act CAP 4D, the Cabinet Secretary submitted the treaty and a memorandum to the Speaker of the National Assembly on 7th April 2025.
• 86.Upon receipt of the Parliamentary Memorandum by the National Assembly, the relevantparliamentarycommitteeduringitsconsiderationofthetreatyisrequiredto ensurethereispublicparticipation.
• ss g reservation the ratification of a treaty.

88. WWhere the ratification of a treaty is approved by the National Assembly, the Registry of Treaties prepares the instrument of ratification of the treaty. 89. The instrument is then signed, sealed, deposited at the relevant depositary, and a copy isfiledwiththeRegistrarofTreaties.

4.0COMMITTEEOBSERVATIONS

90. Having considered the Agreement and analyzed the submissions made, the Committeeobservedasfollows: 2. (a) The Agreement Establishing the EuropeanBank for Reconstructionand Development (EBRD), also referred to as the AEB,is the EBRD's Treaty and was signed in Paris by founding members on 29 May, 1990 and entered into forced on 28March1991. 3. economiesandtopromoteprivateandentrepreneurialinitiativesincountries committed to applying the principles of multiparty democracy, pluralism and marketeconomies. 4. (c)TheBoard of Governorsof EBRDvoted for the limited and incremental expansion of its operations into sub-Saharan Africa. The decision reflected the growing economiclinksbetweencountrieswheretheBankhasinvestedinSub-Saharan Africa and the potential for developing private sector there. 5. (d) Following the decision of the Annual General Meeting, the EBRD will invest, for the first time, in up to six sub-Saharan African Countries from 2025. Based on EBRD's mandate and business model, Kenya is among the six countries identified for investment. 6. (e) EBRD imposes the following obligations to Member States: 7. (i)Each member shall subscribe to shares of the capital stock of the Bank; 8. (ii)The voting power of each member shall be equal to the number of its subscribedsharesinthecapital stockoftheBank; 9. (ii)EachmembershallberepresentedontheBoardofGovernorsandshall appoint one governor and one alternate; 10. (iv) Member states are obliged to create an enabling environment that supports structural reforms that promote liberalization, privatization, and economic diversification. 11. (f)Kenya will be required to pay subscription of 203 shares, of which:

• i. 37 are paid-up shares with a total cost of EUR 370,000 (Approx. Kshs.61,162,406.00@165.30-CBKrateon17/11/2023)

13. ii.I66shares are callable

PARTV

5.OCOMMITTEERECOMMENDATION

• 91.The Committee, having reviewed the Agreement recommends that, pursuant to Section 8 of the Treaty-Making and Ratification Act, Cap.4D, the House APPROVES the Accession to theAgreement Establishing the European Bank for Reconstruction andDevelopment(EBRD).

SIGNED: ..

.DATE:.

THEHONCPAKURIAKIMANI,CBS,M.P. CHAIRPERSON,DEPARTMENTALCOMMITTEEONFINANCEAND NATIONALPLANNING