Kenya is expected to receive about $400 million in emergency financing from the World Bank within six weeks to help the country respond to several economic and environmental challenges.
According to Reuters, the funding will come through the World Bank’s Rapid Response Option, which is designed to provide quick financial support to countries facing major emergencies. Kenya initially sought the funding after the rise in global oil prices caused by the war involving Iran increased pressure on its economy.
However, Kenya’s concerns have now expanded beyond high energy prices. The country is also preparing for the possible effects of El Niño, which could affect agriculture, water resources and infrastructure. Kenya experienced severe El Niño conditions in 1997, when heavy rainfall destroyed crops and damaged roads and homes.
Health concerns are another reason for the emergency support. A serious Ebola outbreak in neighbouring Democratic Republic of Congo has raised concerns across East Africa, particularly after the disease also spread into Uganda. The funding could help Kenya strengthen its health sector and prepare for possible health emergencies.
The proposed funding is expected to be equivalent to around 10% of Kenya’s undisbursed World Bank lending portfolio. Kenya currently has a World Bank project portfolio worth more than $7 billion, with about $3 billion already disbursed or committed.
Kenya is also facing pressure from rising debt repayments, which have reduced the government’s available funds for other areas of the economy. The additional World Bank financing could therefore provide some relief as the government manages its financial obligations.
The World Bank has already approved the projects supporting the emergency financing arrangement. The remaining step is for Kenya and the World Bank to complete a Contingency Emergency Response Project, which will determine the final amount and conditions of the funding.
The development comes as African economies continue to face pressure from high energy costs, climate-related risks, debt and public-health emergencies.
