The World Bank approved $750 million of funding to support Kenya’s economic recovery from the coronavirus pandemic and measures to improve government finances.
The development policy operation loan will help the East African nation enhance the performance of its domestic debt market, reform the electricity industry and improve governance, the Washington-based lender said in a statement on Thursday. The funding is on concessional terms at an interest rate of about 3%, it said.
Senior Economist for the World Bank in Kenya, Alex Sienaert said in the statement that “the government’s reforms supported by the DPO help reduce fiscal pressures by making public spending more efficient and transparent, and by reducing the fiscal costs and risks from key state-owned entities,”
It’s the fourth time in three years that Kenya has tapped the DPO facility, bringing cumulative borrowing to $3.25 billion. East Africa’s biggest economy received $750 million in June last year, $1 billion in May 2020 and $750 million in 2019. Requests for DPOs are presented to the World Bank’s board after the implementation of agreed reforms.
Kenya consented to a raft of measures to secure the funding, including shifting government procurement to a new electronic platform to make transactions more transparent and reduce opportunities for corruption, the lender said. By the end of 2023, the program aims to have five strategically selected ministries, departments and agencies procuring goods and services through the electronic platform, it said.
Reforms will also create a platform for investments in least-cost, clean-power technologies, and enhance the legal and institutional setup for PPPs to attract more private investment. Aligning clean energy investments to demand growth and ensuring competitive pricing through a transparent, competitive auction-based system has the potential to generate savings of about $1.1 billion over 10 years, it said.
The DPO also supports Kenya’s capacity to handle future pandemics through the establishment of the Kenya National Public Health Institute, which will coordinate programs to prevent, detect and respond to public health threats, including infectious and non-infectious diseases