World Bank Approves $750 Million DPO for Kenya

The World Bank has approved a $750 million loan to help Kenya fast-forward its COVID-19 economic recovery, improve water and energy infrastructure development and strengthen the country’s fiscal sustainability. The loan will be issued as a Development Policy Operation (DPO), a facility which the World Bank leverages to help countries achieve policy and institutional reforms in addressing poverty and driving economic growth.

Specifically, the loan will target three key areas, namely, fiscal and debt reform; the electricity sector; and the governance of natural and human capital. The DPO was initiated in 2020, with the $750 million package representing the second in a two-part series which Kenya will repay with an annual interest of approximately 3%.

Kenya will utilize the DPO to reform its fiscal and debt institutions and processes to ensure spending is transparent in a bid to address corruption. In this regard, a new electronic platform will be implemented to ensure public procurement of services and goods is both transparent and efficient.

Kenya will utilize the DPO to reform its fiscal and debt institutions and processes to ensure spending is transparent in a bid to address corruption. In this regard, a new electronic platform will be implemented to ensure public procurement of services and goods is both transparent and efficient.

“The government of Kenya has maintained the momentum to make critical reform progress despite the disruption caused by the pandemic,” stated Keith Hansen, Country Director for Kenya at the World Bank, adding that, “The World Bank, through the DPO instrument, is pleased to support these efforts which are positioning Kenya to sustain its strong economic growth performance and steering it towards inclusive and green development.”

The DPO will also establish a platform that will be used to attract and manage clean energy investments from both public and private sector partners. This will help accelerate the rollout of green energy and smart grid solutions across Kenya as the country seeks to address energy poverty and fast track the modernization of its electricity industry. The project is expected to generate savings of up to $1.1 billion for Kenya by aligning clean energy investments to demand growth.

Additionally, the loan will help optimize the management of natural and human capital and strengthen Kenya’s environmental management, climate mitigation strategies and water resources.

Alex Sienaert, Senior Economist for the World Bank in Kenya, said that a “… strong and sustainable growth is essential to achieve medium-term fiscal consolidation and to reduce the debt burden and related risks. The package includes measures to spur more private investment and growth, whilst strengthening the management of Kenya’s natural and human capital which underpin its economy.”

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Nicholas Nhede

Nicholas Nhede

Nicholas is an energy sector journalist with a passion on how technology and diversification of the energy mix can be used to address energy sector challenges. Nicholas holds a diploma in Journalism and Communication studies and has been covering energy-related topics including the Internet of Things, distributed energy and digitalisation since 2015.

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