World Bank pledges $4 bln to Kenya over four years
24 June 2014, 08:13
Nairobi - The World Bank will lend Kenya $4 billion over the next four years, most at below commercial rates, to help finance new infrastructure and other areas of the economy to boost growth and cut poverty.
Thomas O'Brien, the Bank's country co-ordinator for Kenya, Rwanda and Eritrea, said on Monday the bulk of the funds, about $600-$800 million annually, would be in concessionary loans to the government for transport, energy and other projects.
The rest will be direct lending to firms through its private sector arm, the International Finance Corporation (IFC), and in form of guarantees to foreign investors.
"We are going to be investing ... $4 billion over the next several years to help spur economic growth (and) to bring down poverty," O'Brien told Reuters after the launch of the bank's Kenya strategy to mid-2018.
The east African nation relies on funding by international development financiers like the World Bank for a portion of its budget. Western nations are also major donors.
Finance Minister Henry Rotich said the deficit in Kenya's budget for the year starting July 1 would be 342.4 billion shillings ($3.92 billion), equivalent to about 7.4 percent of gross domestic product.
O'Brien said there was an urgent need to improve the business climate to raise private investment from the present equivalent of 15 percent of GDP. "That means putting money into transport, into energy, into water," he said.
Kenyan officials are racing to build new roads, airports, seaports and energy plants to keep up with growing demand and to cut costs of doing business, but O'Brien said more was needed.
"Like most economies, Kenya has been improving its infrastructure but it is still not where it needs be," he said.
The World Bank's financial support will also be spent on funding projects social sectors like education and health in order to help the poor, he said.
Some 39 percent of the country's 40 million population are classed as poor, which the World Bank defines in global terms as those living on $1.25 or less a day.