The new bank, Sahel-Sahara Investment & Trade Bank, will be set up within months.
The move comes two months after Kenyan Vice-President Kalonzo Musyoka met Libyan leader Muammar Gaddafi at the Community of Sahel-Saharan Summit in Benin.
The state-owned Libya Africa Portfolio Fund for Investment is planning to invest in major oil and gas projects in East Africa. It recently bought Mobil Kenya, one of the country’s oil marketing firms. Tripoli also plans to invest in Kenya’s refining business.
In 2006, Libya’s Tamoil, through its affiliate Tamoil East Africa, won the contract to build, own and operate an oil pipeline between Kenya and Uganda.