World Bank loans increase by Sh304 billion in coronavirus year

Treasury and Planning CS Ukur Yatani on his way to present the 2021-2022 Budget at Parliament Buildings on June 10, 2021. [Jonah Onyango, Standard]

The World Bank has disbursed $750 million (Sh80.2 billion) to Kenya, pushing the global lender’s loans to the country in the last one year to Sh1.098 trillion.

Since the country recorded its first case of Covid-19 in March last year, the Washington-based institution has now given Kenya close to Sh304 billion, which has raised its stock of debt by nearly a third.

By end of March last year, the World Bank’s loans were estimated at Sh801.2 billion but this has since surged to Sh1.1 trillion, according to official data.

The money will be used to support Kenya’s development programmes including the fight against Covid-19 and revamping the loss-making Kenya Power to connect more people to the national electricity grid.

Kenya, which just read its budget for the 2021-22 financial year, will also use the funds to increase accountability in public spending and reduce opportunities for corruption, the World Bank said in a statement yesterday.  

Cost savings

World Bank Country Director for Kenya Keith Hansen said the support also strengthens public investment management by seeking cost savings and ensuring that there is value for money for all the projects that Kenya undertakes.

Both measures, he said, are expected to yield fiscal savings of up to $2.6 billion (Sh278.2 billion).

“The operation prioritises reforms in hard-hit sectors, such as healthcare, education and energy, which have been made urgent by the impacts of the Covid-19 crisis,” said Mr Hansen.

The money will also be used for the establishment of an electronic procurement platform for the public sector that seeks to make government purchases of goods and services transparent.

In his Budget Speech on Thursday, National Treasury Cabinet Secretary Ukur Yatani said December 31 will be the final date for rolling out the electronic government procurement system and discontinuation of the manual procurement processes.

“In this regard, the government will realise savings as a result of greater efficiency, reduced operational costs, enhanced transparency and accountability through increased bidder participation,” he said.

The World Bank money, known as development policy financing, will also be used to reinforce Kenya’s green economic recovery from the Covid-19 crisis. 

“In recognition of the severity of the crisis and need for a comprehensive response, we are supporting the government’s post-Covid-19 Economic Recovery Strategy, which is designed to mitigate the adverse socio-economic effects of the pandemic and accelerate economic recovery and attain higher and sustained economic growth,” Hansen said.

The policy operation also prioritises energy sector reforms to improve electricity access and ensure that Kenyans benefit from least-cost, clean energy sources.

Further, the new policy framework will help strengthen Kenya Power’s finances with a new competitive pricing regime.

Kenyans will also benefit from better healthcare especially for the poorest and most vulnerable households, through National Hospital Insurance Fund governance reforms and the establishment of the Kenya Centre for Disease Control to strengthen disease prevention, detection and response.

Reforms will further seek to provide Kenyans with more equitable access to higher education, through a performance-based funding method to reduce the imbalances and inefficiencies created by the existing funding model for universities.