The World Bank has provided financial support for infrastructure and development programs in Kenya dating back to May 1960. [1] The first Kenyan project that was financed by the World Bank was the African Agriculture Project, the World Bank issued the then British Colony with $5.6 million to invest in infrastructure that was vital to developing Kenya's agricultural sector. [2]
The World Bank has maintained its relationship with Kenya and continues to finance development projects. Kenya receives loans from both the IDA and IBRD agencies of the World Bank which are designed to help low and middle income countries. [3] The World Bank has publicly stated its support for the signature "Big 4 Agenda" of President Uhuru Kenyatta, which aims to develop Kenya's manufacturing sector while improving access to healthcare, nutrition, and affordable housing. [4] The World Bank has also stated their support for Kenya's "Vision 2030", which is a development blueprint to turn Kenya into a middle income nation by 2030. [5] [6] The World Bank's country director for Kenya is C. Felipe Jaramillo, he also acts as the country director for Rwanda, Somalia, and Uganda. [7] [8] The World Bank has increased the value of its lending to Kenya in recent years, from $623 million in 2019 to $1.27 billion in 2019. [9]
Critics of the World Bank have raised concerns about the impact of their loans on Kenya's debt problem. The debt held by the Kenyan government has more than doubled in the past 6 years to over $50 billion. [10] In 2019 Kenya raised their legal debt limit as their debt exceeded its previous cap of 50% of GDP. [11] The World Bank has also been criticised for an alleged lack of concern about the negative impacts to the environment and the livelihood of local communities that projects they support may have. The Accountability Counsel and other NGO groups have alleged that World Bank funds are contributing towards the building of a coal-fired power plant in the coastal region of Lamu despite concerns about pollution and the displacement of local communities. [12] [13] Widespread accusations about the corrupt use of funds designated to infrastructure projects in Kenya has caused concerns about the potential for the misuse of World Bank loans. Corruption reports by the Kenyan government estimate that up to 70% of corruption in Kenya may be associated with the process of procuring government contracts, many of these contracts are financed through money borrowed from foreign governments and international financial institutions. [14] The World Bank's Office of Suspension and Debarment has suspended and disbarred several Kenyan companies and individuals on the grounds of alleged corruption. [15] The World Bank's IDA agency which finances projects in low income countries has included a greater emphasis on combatting corruption in its most recent reports. [16] The IDA has committed to several projects with the goal of increasing accountability and transparency in the government's of low income countries. [17]
The economy of Kenya is market-based with a few state enterprises. Kenya has an emerging market and is an averagely industrialised nation ahead of its East African peers. Currently a lower middle income nation, it plans to be a newly industrialised nation by 2030. Major industries include financial services, agriculture, real estate, manufacturing, logistics, tourism, retail and energy. As of 2020, Kenya had the third largest economy in Sub-Saharan Africa, behind Nigeria and South Africa. By 2023, the country had become Africa's largest start-up hub by both funds invested and number of projects.
The International Bank for Reconstruction and Development (IBRD) is an international financial institution, established in 1944 and headquartered in Washington, D.C., United States; it is the lending arm of World Bank Group. The IBRD offers loans to middle-income developing countries. It is the first of five member institutions that compose the World Bank Group. The initial mission of the IBRD in 1944, was to finance the reconstruction of European nations devastated by World War II. The IBRD and its concessional lending arm, the International Development Association (IDA), are collectively known as the World Bank as they share the same leadership and staff.
The International Finance Corporation (IFC) is an international financial institution that offers investment, advisory, and asset-management services to encourage private-sector development in less developed countries. The IFC is a member of the World Bank Group and is headquartered in Washington, D.C. in the United States.
The International Development Association (IDA) is a development finance institution which offers concessional loans and grants to the world's poorest developing countries. The IDA is a member of the World Bank Group and is headquartered in Washington, D.C. in the United States. It was established in 1960 to complement the existing International Bank for Reconstruction and Development by lending to developing countries which suffer from the lowest gross national income, from troubled creditworthiness, or from the lowest per capita income. Together, the International Development Association and International Bank for Reconstruction and Development are collectively generally known as the World Bank, as they follow the same executive leadership and operate with the same staff.
Debt relief or debt cancellation is the partial or total forgiveness of debt, or the slowing or stopping of debt growth, owed by individuals, corporations, or nations.
Official development assistance (ODA) is a category used by the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) to measure foreign aid. The DAC first adopted the concept in 1969. It is widely used as an indicator of international aid flow. It refers to material resources given by the governments of richer countries to promote the economic development of poorer countries and the welfare of their people. The donor government agency may disburse such resources to the government of the recipient country or through other organizations. Most ODA is in the form of grants, but some is measured as the concessional value in soft (low-interest) loans.
China–Kenya relations refer to the bilateral relations between the People's Republic of China and Kenya. The two countries established relations in 1963, suspended ties temporarily in 1967, but ultimately re-established diplomatic relations in 1978. Since then, they have significantly expanded their economic and investment agreements, such that China is currently Kenya's largest trading partner. While the robust trade, investment, and Chinese-led infrastructure projects have benefitted Kenya's overall development and have been labelled by both governments as "win-win" collaborations, local media and foreign analysts have increasingly criticized both the potential consequences of Kenya's loans from China as well as Kenya's overall economic dependence on foreign capital and products. The most ambitious collaboration, the Standard Gauge Rail that was planned to connect Nairobi, Kenya, Uganda, South Sudan, and Rwanda using Chinese financing and contractors, has attracted even more controversy due to financial complications, questions on the legality of its tender process, and the alleged collateralization of Kenya's Mombasa port.
Kenya Vision 2030 is a Kenyan development program, aiming to raise the average standard of living in Kenya to middle income by 2030. It was launched on 10 June 2008 by President Mwai Kibaki. Developed through "an all-inclusive and participatory stakeholder consultative process, involving Kenyans from all parts of the country," the Vision is based on three "pillars": Economic, Social, and Political. The Vision's adoption comes after the country's GDP growth went from 0.6% in 2002 to 6.1% in 2006, under Kibaki's Economic Recovery Strategy for Wealth and Employment Creation (ERS).
Lamu Port-South Sudan-Ethiopia-Transport (LAPSSET) Corridor project, also known as Lamu corridor is a transport and infrastructure project in Kenya that, when complete, will be the country's second transport corridor. Kenya's other transport corridor is the Northern Corridor, which links Mombasa to Uganda, passing through Nairobi and much of the Northern Rift. Some basic LAPSSET infrastructure has been built. The construction of LAPSSET's main components is currently ongoing with construction of the first berth at Lamu Port completed in October 2019.. Although the project is not formally stalled, its short to medium term success looks increasingly unlikely. Insecurity and political instability in Kenya are mostly to blame for this, as are more commercially viable alternative pipeline options through Tanzania or Ethiopia. The low oil prices since 2015 also affect LAPSSET's commercial prospects.
Climate finance is an umbrella term for funding investments in the area of climate change mitigation and adaptation. In a wider sense, the term refers to all financial flows relating to climate change mitigation and adaptation. In a narrower sense it only refers to transfers of public money from developed countries to developing countries. This would be in light of their obligations under the UN Climate Convention to provide new and additional financial resources.
Most of Kenya's electricity is generated by renewable energy sources. Access to reliable, affordable, and sustainable energy is one of the 17 main goals of the United Nations’ Sustainable Development Goals. Development of the energy sector is also critical to help Kenya achieve the goals in Kenya Vision 2030 to become a newly industrializing, middle-income country. With an installed power capacity of 2,819 MW, Kenya currently generates 826 MW hydroelectric power, 828 geothermal power, 749 MW thermal power, 331 MW wind power, and the rest from solar and biomass sources. Kenya is the largest geothermal energy producer in Africa and also has the largest wind farm on the continent. In March 2011, Kenya opened Africa's first carbon exchange to promote investments in renewable energy projects. Kenya has also been selected as a pilot country under the Scaling-Up Renewable Energy Programmes in Low Income Countries Programme to increase deployment of renewable energy solutions in low-income countries. Despite significant strides in renewable energy development, about a quarter of the Kenyan population still lacks access to electricity, necessitating policy changes to diversify the energy generation mix and promote public-private partnerships for financing renewable energy projects.
The proposed Lamu Coal Power Station is a potential 1,050 MW (1,410,000 hp) coal-fired thermal power station in Kenya. The proposed plant would be developed on 865 acres of land and feature a 210 meter tall smoke stack, which would become East Africa's tallest structure. It would have been the first ever coal power plant in Kenya.
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA), two of five international organizations owned by the World Bank Group. It was established along with the International Monetary Fund at the 1944 Bretton Woods Conference. After a slow start, its first loan was to France in 1947. In the 1970s, it focused on loans to developing world countries, shifting away from that mission in the 1980s. For the last 30 years, it has included NGOs and environmental groups in its loan portfolio. Its loan strategy is influenced by the United Nations' Sustainable Development Goals, as well as environmental and social safeguards.
China originally joined the World Bank Group (WBG) on December 27, 1945. However, after the Chinese Civil War, the World Bank recognized the Republic of China as its member, until the relationship ended in 1980, when the membership was replaced by the People's Republic of China. The People's Republic of China (PRC) did not become involved with the World Bank group until 1980, when it first joined the World Bank in April due to the market reforms known as reform and opening-up. Prior to the economic reform and its relation with the World Bank, according to CRS, "China maintained policies that kept the economy very poor, stagnant, centrally controlled, vastly inefficient, and relatively isolated from the global economy". Since its entry into the World Bank, China has transformed into a market-based economy and has experienced rapid economic and social development. Currently, although China has become the world's second largest economy with 1.4 billion population, it still has a close relationship with the World Bank in areas such as poverty, environmental protection and new challenges from the reform.
Debt-trap diplomacy is a term to describe an international financial relationship where a creditor country or institution extends debt to a borrowing nation partially, or solely, to increase the lender's political leverage. The creditor country is said to extend excessive credit to a debtor country with the intention of extracting economic or political concessions when the debtor country becomes unable to meet its repayment obligations. The conditions of the loans are often not publicized. The borrowed money commonly pays for contractors and materials sourced from the creditor country.
Kenya is a lower-middle income economy. Although Kenya's economy is the largest and most developed in eastern and Central Africa, 16.1% (2023/2024) of its population lives below the international poverty line. This severe poverty is mainly caused by economic inequality, government corruption and health problems. In turn, poverty also worsens these factors. The Kenyan government's efforts to address poverty have received help from international institutions as well. The incident rate of poverty has steadily decreased, as shown by a recent MPI index.
After separating from the World Bank and other International Financial Institutions for decades due to pressure from the Soviet Union, Poland rejoined the World Bank on June 27, 1986. The World Bank was instrumental in financing and providing technical assistance for Poland as it transitioned from a Command Economy into a Market-Oriented Economy. As a middle income country, Poland has worked primarily with the International Bank for Reconstruction and Development since it is not eligible for loans from the International Development Association. Additionally, Poland has had a few projects with the Multilateral Investment Guarantee Agency and the International Finance Corporation. Currently, most of Poland's engagements with the World Bank Group concern environmental concerns and public finances.
Tajikistan did not join in the World Bank until 1993. Before the collapse of USSR in 1991, Tajikistan was experiencing planned economy which was dominated by Moscow. Right after the dissolution, different from other nations which experienced a relatively stable transition from planned economy to market economy, Tajikistan fell into a serious civil war. As a result, the first mission after Tajikistan became the official member of the World Bank, was to recover its economy from bullets and blood. In 1997. $10 million credit was grant for Post-Conflict Rehabilitation Project. The proposed credit was used to conduct necessary imports and to restore production. Under different time periods, the World Bank and Tajikistan worked together in response to various problems. Later on, the economic crisis of 2008 caused the inflation of food prices in Tajikistan. In response to the crisis, the World Bank issued $6.25 million for the Emergency Food Security and Seed Imports Project in order to help at least 28000 households to release the food price pressure. Coming into the 21st century, Tajikistan received financing from IDA and IBRD of the World Bank with respect to programs of healthcare, education, irrigation and agriculture. Over the past years, Tajikistan has received over 130 projects of which 17 are active and a total of over $1.4 billion from the World Bank. With the help of those projects, from 2000 to 2017, the poverty rate in Tajikistan had been decreased from 83% to 29.5%. Besides, current GDP growth rate in Tajikistan is around 7%. Nevertheless, with a stable GDP growth rate, Tajikistan is still one of the poorest countries in Central Asia.
Jamaica first joined The World Bank Group (WBG) on 21 February 1963, when the island nation became a member of The International Bank for Reconstruction and Development (IBRD), which lends to middle and low income nations. This occurred the same month as Jamaica joining the International Monetary Fund (IMF), and one year after declaring political independence. Since joining The World Bank, Jamaica has received in excess of $3 billion US Dollars in loans and grants. Jamaican Minister of Finance, Donald Sangster, led the Jamaican delegations to World Bank and International monetary Fund meetings between 1963 and 1966, while also serving as Governor of the World Bank and IMF. Sangster would go on to serve briefly as the Prime Minister of Jamaica.
The Philippines' history with the World Bank started in 1945 when they became one of the first members of the International Bank for Reconstruction and Development (IBRD). Their first project with the Bank came in 1957 with the Binga Power Project. Since then, the Philippines has received $2.14 billion of disbursed loans from the IBRD. The Philippines is in the constituency entitled EDS 15, comprising Brazil, Colombia, Dominican Republic, Ecuador, Haiti, Panama, Suriname, and Trinidad and Tobago, and headed by Executive Director Fabio Kanczuk.
