EIB Plans to Ramp Up Kenya Funding If State Red Tape Eases

NAIROBI (Capital Markets in Africa) – The European Investment Bank plans to double its funding for infrastructure development in Kenya this year if government bureaucracy in approving projects eases.

The Luxembourg-based lender targets to disburse 200 million euros ($227 million) of loans, half of which will be available for the Kenya Ports Authority to refurbish berths at East Africa’s busiest sea-port in Mombasa county, Catherine Collin, the bank’s East Africa representative, said Thursday in an interview in the capital, Nairobi.

KPA, as the ports agency is known, is waiting for Treasury to approve the loan, Managing Director Daniel Manduku said.

Out of 375 million euros the lender committed in loans last year, only 100 million euros was disbursed, and went exclusively to private projects, according to Collin. “We didn’t sign any government of Kenya deal,” because of “administrative delays” in completing required documentation, Collin said.

Key Insights:

• While Kenya is trying to boost infrastructure spending, it faces financing shortfalls and borrowing constraints. The International Monetary Fund in October raised its assessment of the probability of Kenya’s external debt distress to moderate from low, due to increasing refinancing risks.
• Other loans that the EIB may extend to the Kenyan government include 50 million euros for the Nairobi rapid bus transit system, and 100 million euros for highways.
• The EIB may lend 75 million euros to private equity funds to invest in small businesses, energy projects in Kenya.
• The EIB plans to extend credit of up to 150 million euros to several lenders in East Africa for on-lending, including 30 million euros in debt to Bank of Kigali Ltd. in Rwanda.
• It plans a 45 million-euro loan to rehabilitate water and sanitation services in Mwanza, Tanzania, and a further 35 million euros for the Kisumu Water & Sewerage Co. in Kenya.
• In Burundi, it intends to unlock 70 million euros for a hydro-power project, having frozen funding after sanctions imposed by the European Union following a constitutional crisis related to presidential terms.