Kenya could receive about Ksh.51.8 billion in emergency financing from the World Bank to help deal with several economic and humanitarian risks.
The funding will support Kenya’s response to El Niño, an Ebola outbreak in the region and rising energy prices.
The financing amounts to about $400 million. According to a source familiar with the matter, Kenya could access the funds within six weeks.
World Bank prepares rapid financing plan
A World Bank spokesperson said the lender is helping Kenya finalise a framework for accessing emergency funds.
The framework will allow Kenya to quickly receive financing when an eligible crisis occurs.
It could also cover risks linked to the conflict in the Middle East and El Niño.
Kenya sought the emergency financing after the Iran war began in February and pushed crude oil prices higher.
However, the risks facing the country have since expanded beyond the impact of expensive energy.
Funds to support health and agriculture
The emergency financing would help Kenya respond to the effects of an Ebola outbreak on the health sector.
In addition, the funds would support efforts to deal with the impact of El Niño on agriculture and water resources.
The financing would also help protect the wider economy from the effects of high energy prices.
Kenya could access up to Ksh.51.8 billion
Kenya’s World Bank project portfolio is worth more than $7 billion, equivalent to about Ksh.906.3 billion.
Of this amount, about $3 billion, or Ksh.388.4 billion, has already been disbursed or committed.
Under the World Bank’s emergency financing framework, countries can typically access up to 10 per cent of their undisbursed lending portfolio.
As a result, Kenya could access roughly Ksh.51.8 billion.
However, the final amount will depend on the country’s undisbursed balance when the financing framework is completed.
Kenya and World Bank finalise agreement
Kenya and the World Bank are now working to complete a Contingency Emergency Response Project.
The project will set out the terms and conditions for accessing the emergency funds.
Meanwhile, the World Bank Board has already approved the projects supporting the Rapid Response Option.
Therefore, the funds can be released once Kenya and the lender complete the required document.
Funding comes amid fiscal pressure
The financing comes as Kenya looks for additional sources of funding.
The government has faced growing pressure from rising debt repayments in recent years.
As a result, higher debt costs have reduced the government’s available fiscal space.
The emergency financing could therefore provide additional support as Kenya responds to economic and humanitarian challenges.
