Months after Kenya’s Treasury Cabinet Secretary Henry Rotich wrote to the global financial institution requesting an urgent loan in the form of budget support, WorldBank has yielded to Kenya’s request.
In a letter to the President of the World Bank, Ms Kristalina Georgieva dated March 13, 2019, CS Rotich said the money will be used to fund the Big Four agenda.
The World Bank has now approved the Sh75 billion ($750 million) loan request, further adding up to the country’s growing debt burden.
On Wednesday, the lender said the loan facility will support critical reforms that will enhance competition and market transparency, reduce corruption opportunities in agriculture, and help Kenyan farmers to achieve higher productivity and increase their incomes.
“Reforms supported by the facility include better targeting of subsidies for agricultural inputs to reach the intended beneficiaries (using e-vouchers and biometric digital identification); reducing inefficiencies and leakages in the procurement and marketing of fertiliser; and establishing a warehouse receipt system and a commodities exchange to help farmers get easier access to credit and to reduce post-harvest losses,” the World Bank said in a statement.
The lender also said the loan will support the advancement of digitisation through the creation of the national digital ID and pushing for access of Internet services to all Kenyans.
“The facility will enhance service delivery by the government to its citizens and reduce the need for face-to-face interactions and corruption opportunities.”
The loan is described as Inclusive Growth and Fiscal Management Development Policy Financing. This type of credit will see the money flow straight into the budget to top up the public purse.
Kenya’s WorldBank loan request is a departure from a 10-year tradition where the country kept off World Bank loans as it sought to wean itself from over-reliance on the Bretton Woods institution to support its budget.
In recent months, more and more Kenyans have raised alarm over government insatiable appetite for foreign loans saying the loans were unnecessary and most of the times it ends up being mismanaged and stolen to the detrimental of the future generation prosperity.
Kenya’s public debt crossed the Sh5.1 trillion mark in September 2018 and the latest borrowing is likely to push it beyond Sh5.5 trillion by close of the year.