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NEWS & CURRENT AFFAIRS

The Nairobian

Kenya absorbs less than a third of World Bank loans

Business

By Patrick Alushula | Jun 08, 2016

Central Bank Governor Dr Patrick Njoroge (right) flanked by World Bank Group Lead Economist & Program Leader Apurva Sanghi (left) and Country Director Diarietou Gaye during the World Bank Group open Day in Nairobi. Kenya has absorbed less than a third of Sh565 billion ($5.6 billion) lent by the World Bank in the last three years. (PHOTO DAVID NJAAGA/STANDARD}

Kenya has absorbed less than a third of Sh565 billion ($5.6 billion) lent by the World Bank in the last three years.

According to the National Treasury, the absorption rate averages 30 per cent, meaning that only Sh171.9 billion has been put into use while Sh393.1 billion that World Bank committed has not been taken up. This was revealed by ‎Director General of the Directorate of Public Debt Management in the Ministry of National Treasury Wahoro Ndoho during the World Bank open day held yesterday at Nairobi Club.

“The uptake of donor funds as a government has not been efficient. We are yet to realise its effectiveness due to undue weaknesses in some of our disbursement processes, donor conditionality and the issue of accountability,” said Wahoro.

Wahoro was standing in for Treasury CS Henry Rotich who he said was attending to ‘urgent and pressing issues in finalising the budget Statement’ which is expected to be read today.

World Bank is the largest multilateral financing partner to Kenya with the funds supporting among others 27 national projects covering infrastructure, agriculture, education health and sanitation.

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According to Wahoro, while this is possibly a third of Kenya’s entire development budget, absorption of World Bank funds remains a challenge to both national and county governments.

“Over 70 per cent of the funds have not reached our countrymen. This is unacceptable and we must change,” decried Wahoro. During the event, Treasury also disclosed that World Bank through International Finance Corporation (IFC) has also committed $948 million (Sh95.8 billion) to the private sector projects.

Speaking at the same function, which was to showcase both public and private projects that WB is funding in Kenya, Central Bank of Kenya (CBK) Governor Patrick Njoroge commended IFC’s role in the financial sector.

“IFC has taken equity positions with particular banks in Kenya as well as providing lending support for instance Chase Bank to lend to SMEs,” he said.

The multilateral lender was also instrumental in restructuring CBK in 2010-11. Currently, it is helping CBK in strengthening supervision. But even with the low absorption rate of donor funds, Kenya has a partnership framework with World Bank which covers the period of 2014 to 2018 and already the lender has committed $4 billion (Sh400 billion) to support Medium Term Plan and Vision 2030.

However, Wahoro said Treasury has taken various steps to address this scenario and promised that the public should expect a lot of improvement in the forthcoming 2016-17 financial year. On the piling debt in the country, Wahoro said that the management of debt in Kenya has been a major concern.

He said that the budget that will be tabled in Parliament today will address this issue. According to the half year budget Implementation Review Report released by the Office of Controller of Budget in mid-April, of the Sh174.65 billion that Kenya expected to receive from donors, only Sh85 billion was received, being less than half of the target.