World Bank approves US$750mn for Kenya’s growth

AF CAF ATR 1The World Bank Board of Directors has approved a US$750mn International Development Association (IDA) credit to support the government of Kenya’s reforms to enhance inclusive growth, accelerate poverty reduction and achieve its Vision 2030 objective of becoming a middle-income industrialised country

The operation lends support to the government’s ‘Big Four’ agenda which prioritises agriculture, affordable housing, universal health coverage and manufacturing.

In agriculture, the Kenya inclusive growth and fiscal management development policy financing facility will support critical reforms that will enhance competition and market transparency, reduce corruption opportunities and help Kenyan farmers to achieve higher productivity and to 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.

By supporting 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.

In housing, the operation will remove major regulatory constraints that developers face, help them lower construction costs and thereby increase the supply of less-expensive housing units.

The reforms supported by the operation are set to unlock the availability of longer-term home loans and catalyse the development of the housing finance market in Kenya, which is expected to triple the proportion of households in Kenya who have access to a mortgage.

The operation will also provide support to the government’s medium-term fiscal consolidation plan by supporting measures to improve revenue mobilisation, public expenditure and the prudent management of Kenya’s debt. It also supports reforms to enhance the private sector’s participation in the inclusive growth process.

“Measures supported by this operation are expected to benefit ordinary Kenyans through better targeting of agricultural subsidies to reach low-income farmers, prosecuting those who engage in fraudulent procurement practices, increasing availability of affordable housing, and improving revenue mobilization. This operation creates a foundation for essential reforms for fighting corruption, liberalising markets and enhancing inclusive growth,” said Felipe Jaramillo, country director for Kenya in World Bank.

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