President William Ruto yesterday agreed to implement the World Bank’s tough financing conditions in return for additional cheap loans from the global financier.
Dr Ruto asked for significant capital injection into the International Development Association (IDA), the World Bank Group’s development finance institution, which offers cheap loans and grants to poor countries, notably in African countries including Kenya.
Loans from the World Bank come with conditions that range from budget cuts to additional taxation and freeze in public sector pay and hiring.
“As we make this call, we as African Heads of State and governments commit to play our part by taking deliberate and robust actions to improve fiscal discipline, increase domestic revenue mobilisation, develop investor friendly policies and enhance anti-corruption measures,” President William Ruto told a meeting of African leaders and the World Bank to discuss IDA funding in Nairobi.
“Our proposal and request entail a vision for Africa-driven socioeconomic development, executed with transparency and inclusiveness, and our case is straightforward: Significant capital injection into IDA is crucial,” the President said.
His push for additional resources is part of the African Heads of State request for more funds to low-income countries in 2025 from the multilateral lender.
The Heads of State are seeking an increase of IDA resources from $93 billion (Sh12.4 trillion) raised in the last funding round in 2021 to $120 billion (Sh16 trillion) next year.
Donors will make their cash pledges to the IDA, a World Bank institution that offers loans with low-interest rates and long tenures, at a conference to be held in Japan in December.
IDA lending operates on a three-year cycle, which is usually preceded by donors making their contributions at a global meeting. It offers low interest-rate loans to 75 developing nations around the world, the World Bank said, with more than half of them in Africa.
The funding is used by governments to boost access to energy and healthcare, invest in farming, and also build critical infrastructure such as roads.
“African economies were facing a deepening development and debt crisis that threatens our economic stability, and urgent climate emergencies that demand immediate and collective action for our planet’s survival,” Dr Ruto said.
He cited Kenya’s devastating floods and the severe drought affecting Southern African nations such as Malawi.
Heavy rains which have been pounding the country since mid-March have caused flooding, killed over 120 people and postponed the opening of schools.
Flash floods yesterday killed over 60 people, left dozens missing and cut off a major road in Mai Mahiu area.
World Bank President Ajay Banga promised to cut down “burdensome” rules that govern lending to nations under the IDA to make it more efficient and to deliver funds to borrower nations faster.
“We believe a simpler and reimagined IDA can be deployed with more focus to make a meaningful impact,” he said.
Kenya has been a top beneficiary of funds from the IDA despite not being ranked as a low income country, using the funds for budget support amidst difficulties in accessing money in international capital markets.
The country's loans from the IDA approached Sh2 trillion at the end of January, having stood at Sh1.816 trillion compared to Sh528.5 billion a year prior, the National Treasury said.
Kenya ascended to become the fourth largest borrower from the IDA behind Pakistan, Bangladesh and Tanzania as at June last year.
Last year, the World Bank noted that Kenya was accessing about $2 billion (Sh266.6 billion) in concessional funding each year from the IDA and International Bank for Reconstruction and Development (IBRD).
