World Bank to Lend Kenya $4 BillionThe World Bank have pledged $4 billion to Kenya, which will be given over the next four years, most of which will be at below commercial rates.
The cash-injection will help finance new infrastructure developments and other areas of the economy in an effort to boost growth and cut poverty.
Thomas O'Brien, the World Bank's country co-ordinator for Kenya, Rwanda and Eritrea, said that the bulk of the funds – approximately $600-$800 million annually – will be in concessionary loans to the government for transport, energy and other projects. The remainder of the funds will be direct lending to firms through the Bank's private sector arm, the International Finance Corporation (IFC), and in the form of guarantees to foreign investors.
"We are going to be investing…$4 billion over the next four years to help spur economic growth [and] to bring down poverty," O'Brien told Reuters after the launch of the Bank's Kenya strategy, lasting until mid-2018.
Currently, the east African nation relies on funding from international development financiers like the World Bank for a portion of its budget, along with donors from Western nations. French Minister Henry Rotich said that the deficit in Kenya's budget for the year starting 1st July would be KSh 342.4 billion ($3.92 billion), equivalent to around 7.4 percent of gross domestic product.
O'Brien also said there was an urgent need to improve the business climate to raise private investment from the present equivalent of 15 percent GDP. "That means putting money into transport, energy and water," he said.
With Kenyan officials racing to build new roads, airports, seaports and energy plants to keep up with the growing demand and also to cut the costs of doing business, but O'Brien says that more is needed: "Like most economies, Kenya has been improving its infrastructure but it is still not where it needs to be."
This much needed financial support from the World Bank will also be spent on funding projects in social sectors such as education and health, in order to help the poor, O'Brien stated. 39 percent of the country's 40 million population classed as poor, which is interpreted by the World Bank as those on a living wage of $1.25 or less a day.