The African Development Bank (AfDB) has approved a €73 million (Ksh.12.2 billion) loan to Kenya for Phase III of the Competitiveness and Economic Recovery Support Programme, covering the fiscal year 2023-2024.
The programme aims to enhance Kenya’s economic recovery post-Covid-19 by enhancing governance, industrial development, and competitiveness, ensuring public finances’ sustainability and promoting economic and social inclusion.
According to AfDB, Kenya has utilized the General Budget Support operation in phases I and II to address funding gaps for fiscal years 2021/22 and 2022/23.
Phase III of the programme will aid electronic procurement system rollout, Public Finance Management Amendment Bill 2023, privatization bill, social protection policy, and enhanced single registry for Social-Protection in 29 counties, strengthening resilience and economic recovery.
“This additional €73 million in financing, approved today (Wednesday, November 29, 2023) by the Bank’s Board of Directors, will enable the country to consolidate the progress it has already made and allow the Government to have fiscal space to deal with the impact of external shocks,” said Nnenna Nwabufo, the Bank Group’s Director-General for East Africa.
Kenya is implementing measures to consolidate progress made in the first two phases of the programme, aiming to extend the public debt portfolio’s duration, reduce servicing costs, and support vulnerable populations.
Kenya is pursuing a vigorous recovery of its economy after the Covid-19 pandemic and is currently faced with significant shocks.
In addition to a drought that hit the country – last see in 40 years, Kenya is also grappling with the consequences of the Russian invasion of Ukraine.
The Phase III financing kitty comes a week after AfDB approved a $10 million equity investment in Dhamana Guarantee Company Limited to provide long-term funding for East Africa’s infrastructure and real sector.
The investment aims to encourage the utilization of capital markets as a potential alternative financing method.
Dhamana, a Kenyan company with a regional mandate, will concentrate on offering credit guarantees for debt capital market instruments.
The Bank Group’s financial support will empower Dhamana to issue guarantees, enhancing the credit rating of debt instruments.
