World Bank Lends Kenya $600 Mln For Infrastructure

Beatrice Gachenje, Reuters, 21 June, 2012

NAIROBI, kenya - The World Bank said on Thursday it would give Kenya two loans worth a total $600 million to improve water and sanitation services in major towns for an estimated 3 million people and to rehabilitate infrastructure within the capital.

While East Africa's biggest economy has invested heavily infrastructure, especially in areas like roads and power transmission and generation since President Mwai Kibaki took office in late 2002, it still faces funding gaps.

Johannes Zutt, the World Bank country director for Kenya said the Nairobi Metropolitan Services Improvement Project, which is co-funded by a government injection of $330 million, would benefit 1.5 million living in the capital.

"This project will help Nairobi to meet its enormous needs for infrastructure and services, so that it remains a liveable and business-friendly city as well as an engine of future economic growth," Zutt said.

Among the projects targeted include improvement of streets, sidewalks, lighting, drainage, sewage collection, wastewater treatment, and solid waste disposal.

Another $300 million will go towards improving water and sanitation services in major towns in the country, World Bank said.

Through its lending arm, the International Development Association, the bank has already invested $150 million towards the government's water and sanitation services improvement project.
The bank, which expects Kenya's economy to grow 5 percent this year, said the east African nation was one of the most water-scarce countries in the world, with a majority of its citizens unable to access clean water at an affordable price.

In all, the IDA has already invested over $2 billion in sectors like water, energy and transport infrastructure in east Africa's biggest economy.

World Bank's loans typically have zero or very low interest charge and repayments are stretched over 25 to 40 years, including a 5 to 10-year grace period.

Kenya has invested heavily in roads and power transmission, but much of the country is still without sufficient infrastructure.

Businesses complain of inadequate roads to reach markets and frequent power cuts which slow down economic growth.

In February, the Finance Ministry said that the country had a funding gap or about $44 billion needed in the next five to eight years to address infrastructure requirements and this would also need inpt from the private sector to meet it.