Kenya Sees More than $4.5 Billion in World Bank, EU Funding for Energy, Infrastructure

---

Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Despite the threat of turmoil and terrorism, Kenya's medium-term development and energy future is looking bright, with large onshore and offshore oil and gas discoveries with major potential, and the support of international and government financing to build crucial infrastructure projects.

A $591 million medium-term grant to Kenya from the European Commission (EC) (Brussels, Belgium) is part of the $38 billion funding support from the EC being extended to 16 African countries under the European Fund's program for African, Caribbean and Pacific nations.

At the fund signing in Nairobi, EU delegation head Lodewijk Briet said the EU plans to focus increasingly on renewable energy and less on physical infrastructure.

Kenya's National Treasury Cabinet Secretary Henry Rotich said the funds would benefit food security and disaster preparedness, sustainable infrastructure, and institutional governance structures. The ministry has prepared Kenya's external aid policy to facilitate harmonization and coordination of separate donor funds, touching on the same sector to realize better results.

The development funds are expected to prioritize expansion of Nairobi's public transport infrastructure to fight congestion, improve drought management systems, increase food production and support stronger governance, the national treasury reported.

Also weighing into Kenya's development funding is the World Bank (WB) (Washington D.C.), with loans of $4 billion over the next four years, the majority of which will be below commercial rates.

Concessionary loans to the government for transport, energy and other projects would represent the major part of the WB loans at $600 million to $800 million annually. The balance will be released in the form of direct loans to companies through the bank's private-sector arm, the International Finance Corporation (IFC), and in the form of guarantees to foreign investors.

The WB country coordinator for Kenya, Rwanda and Eritrea said there was an urgent need to improve the business climate to raise private investments from the equivalent of 15% of gross domestic product (GDP) by putting money into transport, energy and water. More projects needed to be added to those already in the pipeline, he said.

In July, the Kenyan government will target the construction of 10,000 kilometers (km) of roads to drive growth and development. The first phase of the road-build program will cost $450 million for the construction of 2,000 km. The second and third phases will see the completion of 5,000 km and 3,000 km, respectively. Contractors will be required to oversee maintenance for an additional three years after project completion.

The government has set aside $280 million in the next financial year to oversee the construction and maintenance of roads across the nation to provide for heavy usage, and an initiative will address corruption, vandalism on road properties, and maintenance. Strict compliance with contracts will be enforced.

Roads earmarked for upgrading include Mariakani-Machakos junction, Nairobi southern bypass and Naivasha-Lanet.

For related information, see May16, 2014, article - Power Development Initiative Rolls Out in Africa.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.