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Kenya secures $750 million World Bank loan for major road infrastructure

09 Sep 2020
Financial Nigeria

Summary

The road infrastructure project in Kenya is part of the Horn of Africa Gateway Development Project (HoAGDP), which is considered the biggest infrastructure project undertaken in the northern region since the country’s independence in 1963.

Kenyan President Uhuru Kenyatta

The World Bank on Tuesday announced the approval of a $750 million financing for a road infrastructure project in the northern part of Kenya. The funding will support the upgrade of 365 kilometers of the 740-kilometers Isiolo-Mandera Regional Road Corridor, a major transport route linking north-central Kenya to the country's northeast.

The three-quarters of a billion dollar financing is being provided by International Development Association (IDA), an arm of the World Bank that gives grants and loans to boost economic growth, reduce inequalities, and improve the living conditions of people in the world’s 74 poorest countries.  The road infrastructure project in Kenya is part of the Horn of Africa Gateway Development Project (HoAGDP), which is considered the biggest infrastructure project undertaken in the northern region since the country’s independence in 1963.

The project is expected to spur social and economic infrastructure in a region that has largely been underserved. The World Bank said the fund will also finance the laying of a fiber optic cable along the entire 740-kilometer corridor. This will boost digital connectivity and access to social services for over 3.2 million people living in the region. The project will also spur trade facilitation measures, such as border management systems and construction of border posts and emergency response capabilities. About 30km of spur routes are also going to be constructed.

“The potential of Northeastern Kenya as a transit and regional trade facilitation zone is presently not fully exploited,” said Josphat Sasia, Lead Transport Specialist and Task Team Leader, World Bank. “This transformative project will integrate the region and enhance security, inclusion, and a sense of equity, which the communities living in this underserved region of Kenya have desired for a long time.”

The HoAGDP – expected to be completed within six years – is the first in a series of projects aimed at supporting the development of regional transport corridors and modal linkages under the Horn of Africa Initiative launched in 2019 by the World Bank and participating countries to deepen their cooperation and foster development. The bank said the remaining sections of the 740-kilometers Isiolo-Mandera road corridor will be financed by other development partners.

“Regional integration is fundamental for the countries in the Horn of Africa to create jobs and reduce poverty in an inclusive and sustainable way,” said Deborah Wetzel, World Bank Director of Regional Integration for Sub-Saharan Africa, the Middle East, and Northern Africa.

Last May, the World Bank approved $1 billion loan for Kenya to tackle the COVID-19 pandemic. The bank said the country secured the financing after undertaking policy reforms that directly benefit low-income Kenyan households.

In the meantime, Nigeria's $1.5 billion loan application from the World Bank to tackle the economic shocks of the pandemic is yet to receive the bank's approval. A Reuters report in August said the bank was unlikely to approve the loan for Nigeria last month as planned due to concerns over lack of implementation of desired reforms.

Analysts have said the recent removal of petrol subsidy and the increase in electricity tariffs by the Nigerian government are in line with some of the reforms sought by the World Bank and the International Monetary Fund (IMF).


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