Kenya Insights

Tag: World Bank

  • World Bank Stops KES 97 Billion Loan to Kenya Over Governance Reform Delays

    World Bank Stops KES 97 Billion Loan to Kenya Over Governance Reform Delays

    The World Bank has suspended the disbursement of a crucial KES 97 billion loan to Kenya following the government’s failure to implement key governance reforms as agreed under the lending facility.

    The frozen funds, equivalent to $750 million, were scheduled for release this month through a Development Policy Operations loan that requires Kenya to institute comprehensive reforms aimed at creating fiscal space and strengthening governance structures.

    Central to the impasse is Kenya’s delayed passage of the Conflict of Interest Bill, which seeks to establish stringent accountability measures for politicians and public officials.

    The legislation is designed to prevent government officials from influencing lucrative tender awards to companies they own or are linked to their associates.

    President William Ruto initially rejected the bill in June, citing 12 problematic clauses that he argued had weakened the proposed law.

    While the National Assembly accommodated his concerns, the Senate subsequently blocked key provisions, including those prohibiting government officials from seeking public tenders and requiring regular wealth declarations.

    Beyond the conflict of interest legislation, Kenya has also failed to implement other critical reforms including the adoption of a single bank account for public finances and the automation of government procurement processes to eliminate collusion and contract manipulation.

    World Bank Division Director Qimiao Fan confirmed that the release of funds remains conditional on Kenya completing all agreed prior actions and maintaining an adequate macroeconomic policy framework.

    The bank had previously disbursed KES 155 billion as the first tranche of this facility last year.

    The funding freeze creates a significant budget hole for Treasury Cabinet Secretary John Mbadi, who had not anticipated this delay in his fiscal planning.

    The government now faces the choice of increasing borrowing amid Kenya’s already substantial public debt burden or implementing spending cuts to balance the budget.

    Kenya’s reliance on World Bank financing is set to deepen, with the Treasury projecting loan requirements of KES 170.5 billion annually over the next four budget cycles, up from KES 129 billion in the recently concluded fiscal year.

    This increased dependence comes as the country has effectively ended its relationship with the International Monetary Fund after failing to meet 11 key conditions, resulting in the loss of KES 63.3 billion in potential IMF funding.

    The World Bank’s decision underscores the increasing pressure on developing nations to demonstrate concrete progress on governance reforms before accessing international financing, particularly as global lenders become more selective amid tightening fiscal conditions worldwide.

  • World Bank Wants Low-Income Workers in Kenya Exempted From Paying Housing Levy and SHIF‬

    World Bank Wants Low-Income Workers in Kenya Exempted From Paying Housing Levy and SHIF‬

    Nairobi – The World Bank has recommended that Kenya exempt low-income workers earning below Sh32,333 monthly from the controversial housing levy and Social Health Insurance Fund (SHIF) contributions, citing concerns over reduced disposable incomes and employment formalization barriers.

    In its 2025 Public Finance Review report, the multilateral lender argues that these “unpopular” levies are creating significant financial strain on Kenya’s most vulnerable workers while potentially discouraging formal sector employment.

    The recommendation comes as thousands of Kenyan workers have seen their take-home pay drastically reduced since the introduction of these mandatory deductions.

    Workers now face a combined burden of 1.5% housing levy (matched by employers) and 2.75% SHIF contributions, resulting in some employees taking home less than the legally mandated one-third of their gross salary.

    For a worker earning Sh30,000 monthly, the World Bank’s proposed exemption would increase net pay by Sh956.25, bringing take-home earnings to Sh27,150 from the current Sh26,193.75.

    The exemption would directly benefit approximately 312,018 formal sector workers earning below Sh30,000 monthly – representing 10% of Kenya’s 3.1 million formal sector workforce.

    Economic rationale

    The World Bank’s recommendation is grounded in broader economic concerns about Kenya’s labor market dynamics.

    The institution argues that the current payroll tax structure creates a “structural contradiction” – SHIF depends on employment formalization for sustainability, yet the levy itself discourages businesses from formalizing low-wage positions.

    “The payroll tax design discourages formalization, particularly for low-wage workers and small employers who face higher costs when joining the formal sector,” the report states.

    This creates particular challenges in Kenya’s predominantly informal economy, where most workers in the informal sector are mandated to contribute to SHIF but largely fail to comply.

    Employers are facing mounting compliance pressures under Kenya’s Employment Act of 2007, which prohibits deductions exceeding two-thirds of a worker’s basic pay.

    The Federation of Kenya Employers has repeatedly sought government guidance on managing multiple deductions while remaining within legal limits, particularly when existing loan obligations are factored in.

    The situation has created what employers describe as a “compliance headache,” with companies potentially facing legal action for violating statutory take-home pay requirements.

    The World Bank’s recommendations emerge against a backdrop of declining real wages for five consecutive years, reflecting the ongoing squeeze from rising living costs on Kenyan workers.

    The housing levy, implemented in June 2023, and SHIF, which replaced the National Health Insurance Fund in October 2024, represent significant policy shifts toward funding affordable housing and universal healthcare.

    However, the multilateral lender suggests these goals could be better achieved through alternative funding mechanisms, including increased budget support for health services and targeted assistance for informal workers.

    Government position

    President William Ruto has consistently defended both levies as essential for delivering affordable housing and universal health coverage.

    The administration views these deductions as critical components of its development agenda, despite widespread public resistance.

    The World Bank’s recommendations now present the government with a policy dilemma: maintaining revenue streams for key social programs while addressing legitimate concerns about worker welfare and employment formalization.

    If implemented, the World Bank’s recommendations would require significant policy adjustments, including alternative funding mechanisms for housing and health programs currently dependent on payroll deductions.

    The proposals also align with broader discussions about tax policy reform and the balance between revenue generation and economic growth incentives.

    For Kenya’s low-income workers, who have borne the brunt of multiple economic pressures, the World Bank’s intervention represents a potential lifeline in an increasingly challenging economic environment.

    However, the ultimate decision rests with policymakers balancing competing priorities of social service delivery and worker welfare.

    The recommendation underscores the complex challenge facing many developing economies: funding essential social services while maintaining competitive labor markets and protecting vulnerable workers from excessive financial burdens.

  • World Bank Issues Stark Warning on Kenya’s Debt Crisis While Proposing Tax Overhaul

    World Bank Issues Stark Warning on Kenya’s Debt Crisis While Proposing Tax Overhaul

    Multilateral lender calls for structural reforms beyond austerity measures as government faces mounting fiscal pressures

    The World Bank has delivered a sobering assessment of Kenya’s fiscal position, warning that the country faces a “high risk of default” while simultaneously proposing a radical restructuring of the income tax system that would see top earners pay significantly more.

    In a stark warning delivered this week, World Bank Division Director for Kenya Qimiao Fan cautioned that Kenya’s debt levels have reached concerning heights, with austerity measures alone proving insufficient to address the country’s mounting fiscal challenges.

    “Default will not be an easy solution for Kenya,” Fan warned, citing research showing that sovereign defaults typically reduce GDP per capita by 8.5% and increase poverty rates by 6% within five years. “We have seen that default is not an effective solution for anyone.”

    Treasury Cabinet Secretary John Mbadi has outlined what he termed “aggressive fiscal consolidation measures” to prevent default, including Ksh 120 billion in expenditure cuts for the 2025/26 financial year.

    The government aims to reduce the fiscal deficit below 5.3% in 2025, with the next financial year projecting Ksh 559 billion in non-tax revenue against a total deficit of Ksh 877 billion.

    “We were bold as a government. We took the decision to be radical in terms of projecting our fiscal deficit and in terms of projecting our revenues, which we feel have been exaggerated over the years,” Mbadi stated, acknowledging the Treasury had to cut the budget by Ksh 120 billion.

    The deficit will be financed through a combination of domestic borrowing (Ksh 592 billion) and external borrowing (Ksh 284 billion).

    World Bank proposes tax system overhaul

    However, the World Bank argues that fiscal consolidation must be accompanied by structural reforms, including a comprehensive overhaul of Kenya’s personal income tax system.

    The institution is proposing the creation of a new six-tier tax structure that would shift the burden toward high earners while providing relief to lower and middle-income workers.

    Under the proposed system, Kenyans earning above Ksh 800,000 monthly would face a top tax rate of 38% – up from the current 35%.

    This represents a significant increase for the country’s highest earners, though the move would impact fewer than 10% of formal sector employees.

    The restructuring would benefit lower-income earners significantly.

    Workers earning between Ksh 24,000 and Ksh 32,333 would see their tax rate drop to 15% from 25%, while those earning between Ksh 32,334 and Ksh 166,667 would pay 25% instead of the current 30%.

    Relief for struggling workers

    The proposal comes as Kenyan workers endure their fifth consecutive year of declining real wages.

    Average monthly real pay has fallen from Ksh 62,256 in 2020 to Ksh 55,451 last year – an erosion of Ksh 6,805 in purchasing power.

    Workers’ disposable income has been further squeezed by additional levies including the 1.5% housing tax and the 2.75% social health insurance levy, leaving many with take-home pay below the legally required one-third of their gross salary.

    “What we find is that there is a distortion in the labour market, especially for the low-income earners where the tax band is relatively high compared to higher-income earners,” explained Marek Hanusch, Lead Economist at the World Bank in Kenya.

    “When you adjust the overall income tax in a way that becomes progressive, you would increase the incentive to formalise.”

    The proposed changes would have varying effects across income levels.

    A worker earning Ksh 1 million monthly would see their take-home pay reduced by Ksh 12,123 to Ksh 646,805, while someone earning Ksh 800,000 would face a reduction of Ksh 7,325.

    Conversely, lower-income earners would benefit substantially. A worker earning Ksh 50,000 would see their take-home pay increase by Ksh 179 to Ksh 39,208, while those earning Ksh 100,000 would gain Ksh 3,788.

    Structural reforms required

    World Bank economist Jorge Tudela Pye emphasized that fiscal measures alone would not solve Kenya’s problems.

    “Austerity measures alone might not be enough to get Kenya out of its fiscal hurdles. Structural and governance reforms are also needed,” he noted.

    The warning comes at a critical time as the Treasury prepares to present its budget in the coming weeks, facing the challenge of balancing fiscal responsibility with the need to support economic growth and employment creation in an increasingly challenging environment.

    Kenya’s tax wedge – the difference between pre-tax and post-tax pay – currently stands at 19%, more than double that of countries like Austria, the Netherlands, and Belgium.

    This high tax burden on lower-income earners is seen as discouraging formalization of the economy.

    The World Bank maintains that its proposed tax restructuring would be revenue-neutral, with reduced taxes on lower earners offset by increased levies on the wealthy.

    However, the success of such measures will depend on broader structural reforms to address the underlying challenges facing Kenya’s economy.

    As the government grapples with mounting debt pressures and the World Bank’s stark warnings, the proposed tax reforms represent both an opportunity to create a more equitable system and a test of political will to implement potentially unpopular measures affecting the country’s highest earners.

  • World Bank Projects Kenya To Have The Worst Economic Performance In Recent Years

    World Bank Projects Kenya To Have The Worst Economic Performance In Recent Years

    Kenya’s economy is projected to face its worst performance in recent years, with the gross domestic product (GDP) growth expected to slow to 4.7 per cent in 2024, which is slower than 2023’s growth of 5.6 per cent. This is closer to the country’s pre-pandemic average of 4.6 per cent recorded between 2011 and 2019.

    According to the World Bank’s latest Kenya Economic Update structural imbalances remain major obstacles to achieving faster, sustained, and inclusive growth in Kenya. It says challenges experienced in 2024, including severe floods in April and subdued business confidence following mid-year protests, also contributed significantly to the GDP slowdown.

    Additionally, the report points at reduced public spending, part of ongoing fiscal consolidation efforts as weighing heavily on headline growth.

    The 30th edition report by the Bretton Woods institution notes that while the agricultural and services sectors remain resilient, they are decelerating and there are risks of further slowing. In the short term, the slowdown has been driven by various factors such as a tighter macroeconomic policy framework.

    Industry has been losing momentum, with weaker housing demand amid high interest rates slowing the construction sector.

    “Government expenditure grew, with a large portion of revenue allocated to debt servicing, leaving little room for social and developmental spending. This ongoing fiscal pressure continues to hinder the government’s ability to reduce the deficit and achieve long-term fiscal sustainability,” the report states. It recommends acceleration of Kenya’s structural reform agenda considering its fiscal constraints.

    Higher interest payments

    Despite a projected primary surplus in financial year 2024/25, higher interest payments have kept net financing needs at elevated levels. The report indicates that there has been limited room for external borrowing and domestic government borrowing has also increased, pushing interest rates up and crowding out private sector borrowing.

    While the government has made efforts to shift towards concessional external loans and longer-term domestic securities to manage refinancing risks, debt servicing costs continue to be high and rising. This has placed additional pressures on fiscal space and limiting resources available for essential public services.

    “To manage its high risk of debt distress, fiscal consolidation remains important for Kenya. But fiscal consolidation must be equitable. It requires more efficient, transparent and equitable expenditures that support better service delivery, protect the poor and vulnerable, contain the wage bill, and reduce waste and leakages,” the report recommends.

    Meanwhile, the report outlined that a tight monetary policy framework has contained inflation, bringing it down to 2.7 per cent by October 2024.

    Notably, private sector credit growth is slowing down, reflecting higher interest rates, reduced demand for loans, and crowding out by government borrowing.

    Non-performing loans (NPLs) increased to 14.3 percent, signalling rising credit risks. The CBK reduced the Central Bank Rate (CBR) in the last three Monetary Policy meetings (MPC) – from 13.0 per cent in August 2024 to 11.25 per this month

  • Corruption: World Bank Stops Funding Bridge International Academies

    Corruption: World Bank Stops Funding Bridge International Academies

    The World Bank’s International Finance Corporation (IFC) has divested from Bridge International Academies (BIA) amid pressure from education stakeholders that the low-cost private schools are for profit.

    This move also comes amid reports of scandals that have been reported surrounding BIA and a series of serious complaints to the IFC’s independent accountability mechanism, the Compliance Advisor Ombudsman (CAO) regarding the IFC’s investment in the company.

    In April 2018, CAO received a complaint from the East Africa Centre for Human Rights, a Kenyan NGO, on behalf of current and former parents and teachers regarding IFC’s investment in the Company in Kenya.

    In the course of the compliance investigation, CAO became aware of several allegations of child sexual abuse at the Company’s schools.

    In its Appraisal Report published in October 2019, the CAO announced its decision to carry out a full compliance investigation into the adequacy of the IFC’s due diligence and supervision of its investee. The compliance investigation is ongoing.

    In June 2020, the CAO confirmed acceptance of two new cases on BIA, filed by the parents of two children who were electrocuted while in a BIA school in Nairobi, Kenya.

    The electrocution caused the death of one child and injuries to the other. The Complainants and the Company agreed to engage in dispute resolution to try to arrive at a mediated settlement. The dispute resolution process is still ongoing.

    Finally, in December 2020, the CAO concluded in its appraisal report that there are “substantial concerns regarding the child safeguarding and protection outcomes of IFC’s investment in Bridge considering: (a) specific allegations of child sexual abuse involving Bridge staff and students; (b) the child safeguarding and protection risks of the schools in light of their number, their student body (coming from low-income families), and the young age of students.” The compliance investigation is also ongoing.

    The IFC has invested a total of $13.5 million in BIA since 2014, with the intention of supporting the company’s expansion to other countries.

    In response to the divestment, Anderson Miamen, National Coordinator of the Coalition for Transparency and Accountability in Education (COTAE) in Liberia, said: “We applaud the IFC and World Bank for this bold step, which is long overdue. This is an extremely welcome development and a win for ongoing efforts by right-to-education campaigners and others to push for more investment in public education by governments and development partners across the world, especially in Africa.”

    On her part, Nadia Daar, Head of Oxfam International’s Washington DC office, said: “This is a clear signal that the IFC is distancing itself further from investments that pose risks to children, families, and teachers, and undermine public education systems. The IFC should also make permanent its freeze on investments in for-profit private education.”

    The IFC divestiture comes at a time when a majority of BIA schools have closed down since their for-profit model was unsustainable, particularly in the wake of COVID-19.

    Bridge Academies boasted a population of 100,000 pupils in 2016 as they acquired land in slums like Mathare and Kibera.

    The divestment was confirmed through a note published on 9 March.

  • World Bank Blacklists Africa Development Professional Group Over Fraud

    World Bank Blacklists Africa Development Professional Group Over Fraud

    The World Bank has blacklisted a Kenyan consultancy firm that has undertaken several multi-million shilling projects for top government agencies over fraud.

    The multilateral lender said an investigation conducted by the it’s corruption-fighting unit had established that Nairobi based Africa Development Professional Group (ADP), that says its provides “consultancy and advisory services on management, investments, business solutions, corporate finance and business development” had engaged in fraudulent practices during a bank funded project in Somalia.

    During the debarment period of 21 months, ADP and its affiliates will be ineligible to participate in World Bank-financed projects.

    “The debarment makes ADP ineligible to participate in projects and operations financed by institutions of the World Bank Group,” said the World Bank in a statement.

    “The (Somalia) project was designed to strengthen the staffing and institutional capacity of selected line ministries and central agencies to perform core government functions.”

    The debarment also qualifies for cross-debarment by other multilateral development banks under the Agreement for Mutual Enforcement of Debarment Decisions, including the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank, and the African Development Bank (AfDB).

    The financial institutions, which are mostly owned and financed by governments, have been keen to curb corruption in their projects which run into billions of dollars annually.

    “The debarment makes ADP ineligible to participate in projects and operations financed by institutions of the World Bank Group,” said the bank.

    “It is part of a settlement agreement under which the company acknowledges responsibility for the underlying sanctionable practices and agrees to meet specified corporate compliance conditions as a condition for release from debarment.”

    ADP says on its website its past clients include the Kenya’s Ministry of Lands, Housing and Urban Development, the Gambian Office of the President, the Government of Ghana, the Salaries and Remuneration Commission (Kenya) and the Department for International Development (DfID), Rwanda.

    The above projects are however not related to the debarment.

  • Water charges set to increase 10 times in WB deal

    Water charges set to increase 10 times in WB deal

    Water charges are set to go up ten times after the State increased the regulatory charges on water companies tenfold to cover bulging maintenance and operational charges.

    This is after Water, Sanitation and Irrigation Cabinet Secretary Sicily Kariuki published World Bank-driven regulations which raised user charges from 50 cents per cubic metre to Sh5 for domestic use and livestock farming.

    Water companies will also pay an additional 5% of the charges as the conservation levy while Water Resource Authority’s (WRA) has also been empowered been to review  and adjust the charges every year.

    “A person in possession of a valid water use permit shall pay in addition to the water use charge… a levy amounting to 5% of the monthly water use charge as a water conservation levy,” the new regulations read.

    World Bank gave the new regulations as part of recommendations to Kenya after it gave the government Sh80 billion loan to combat the Covid-19 pandemic and address debt vulnerabilities where it proposed that providers of water services should cover 70% of the WRA’s budget from the current 30%.

    But the introduction of new charges as freshwater conservation levies will see the service providers pass the additional costs on piped water and sewerage to consumers and businesses.

    The WRA was charging homes, livestock, and irrigation 50 cents per cubic metre while those using water for commercial purposes were charged 75 cents for any use above 300 cubic metres. The charges will now shoot to Sh2 per cubic metre for irrigation while commercial use will attract a charge of Sh6 for use over 300 cubic metres per day.

    All water providers will have to install automated meters or face 10% penalty of water used while all late payments will attract an interest charge of 2% per month.

    The cost of water is going up amid reports that several water firms including Nairobi City Water and Sewerage Company (NCWSC), are in the process of reviewing their tariffs with plans to hike prices.

    Providers argue that the increased charges are based on inflation charges and tariff reviews to foot network expansion, electricity, water treatment, pipes, lubricants, chemicals, fuels, sewers and fittings.

    Kenyans are currently paying an average of Sh93 per cubic metre or 1,000 litres for water piped to homes but the hike in water prices remains an emotive issue in irrigation belts like Mwea and Ahero where farmers rely on affordable water for better produce.

     

  • Kenya’s Debt Now Stands At 70pc Of Country’s GDP, World Bank Reports

    Kenya’s Debt Now Stands At 70pc Of Country’s GDP, World Bank Reports

    Kenya’s largest age cohort is between 10 and 14 and will be joining the labor force over the next decade. This inflection point coincides with the country’s effort to steer towards economic recovery from the COVID-19 crisis. Can the jobs and labor market keep up to deliver on this socio-economic dividend?

    The latest Kenya Economic Update Edition 23: Rising Above the Waves, notes that with the working age (18-64) tapped to increase by 1 million per year, this young and growing population will significantly increase the labor supply while reducing the dependency ratio. If this increase in labor supply can be matched by a corresponding increase in good quality jobs, then average household and per capita incomes will increase. However, unlocking this first potential demographic dividend will depend on sufficiently increasing good economic opportunities, especially for youthful labor market entrants. Failure to do so could increase the risk of social unrest as large incoming youth cohorts are faced with limited opportunities.

    “Kenya will need to boost both formal quality job creation and informal sector productivity to generate sufficient quality jobs if it is to accommodate the increased number of labor market entrants,” said Keith Hansen, World Bank Country Director for Kenya.

    What are the key factors influencing the labor market?

    Kenya’s economy is changing, with services becoming more central, but there is still considerable scope to accelerate transformation. The services sector contributed over half of all value-added in 2019 making it the largest contributor to the gross domestic product (GDP) and its growth, with the agriculture and industry sectors contributing smaller amounts. Yet, wide differences in labor productivity across sectors remain with industry as the most productive sector but accounting for only a small share of jobs. Most Kenyans work in agriculture or in low-productivity services jobs, where productivity has stagnated.

    According to the report, labor supply in Kenya is abundant, but certain demographic groups are more vulnerable to inactivity. The labor force participation rate has increased significantly, by 6 percentage points between 2006 and 2019. However, Kenya’s female labor force participation rate, however, falls below that of some regional peers in East Africa.

    Those with higher education had particularly high labor force participation (LFP) rates, while certain vulnerable groups are more often inactive. For example, there is marked increase in LFP among those who are better educated, with 92% of those with completed tertiary education participating in the labor force in 2015/16 compared to 79% of those who have completed secondary education. At the same time, LFP is much lower (a) among those living in the North and North Eastern Development Initiative (NEDI) counties, with just 53%of the working age population participating in 2015/1626; (b) among females (69% in 2015/16); and (c) among those with primary education (68%).

    Job creation slowed down even prior to the COVID-19 crisis as employment diversified from agriculture in the decade to 2015/16 resulting in a larger proportion of service sector employment. As a result, while over half a million more people were employed (3%) in total between 2015/16 and 2019, employment transition to more productive sectors has stalled in the last five years.

    Earnings depend strongly on educational attainment. The premium in earnings compared to having no formal education begins at 27% for individuals who have completed secondary education, 72% for those with completed college education and 158% for those with completed tertiary education. On this account, Kenya has made great strides in providing education, but both education and skills remain low among the current stock of workers.

    Although access to education has increased among the younger cohorts, improving the quality of education remains important. Workers often lack basic skills such as reading or writing, and computer skills. A 2013-17 skills survey  found that most adults with secondary education are functionally illiterate in English. Also, among individuals with university education less than one quarter are functionally literate in English. Employers furthermore identify the inability to handle computers for work related tasks as one of the most significant skills gaps among white-collar workers. For those already working, training and retraining opportunities remain limited.

    How can Kenya produce more productive jobs?

    “To produce more quality jobs Kenya needs to continued investment in early childhood development, increased  primary healthcare coverage and quality of education that can provide fundamental skills to be productive and adaptive to changing skill demands to future entrants in the labor force,” said Ramya Sundaram, World Bank Senior Economist.

    Current workers, especially youth and women, need multifaceted support, combining training to develop different skills, financing, and support in connecting to better opportunities, to increase their employment and earnings. As workers face multiple constraints in finding employment, there is a need for integrated interventions that address the multiple constraints they face to increase their productivity and find employment. These include interventions that tackle both the lack of skills of various dimensions (socioemotional, cognitive, technical, ICT42), on-the-job training and job search support for those seeking wage employment, and support to start businesses (including both financing, business training, behavioral facets, and connecting to markets).

    To increase success in the school-to-work transition, technical skills, whether taught in general higher education or TVET, need to be more relevant; and strong private sector involvement is key. The education system needs to ensure it provides its graduates with the skills that employers are looking for. In higher education, curricula need to be adjusted to encompass task-based activities to prepare youth for work after graduation.

  • Details of Kenya’s Sh108bn fresh Eurobond

    Details of Kenya’s Sh108bn fresh Eurobond

    Debt ridden Kenya has once again raised Sh108 billion ($1 billion) in a fresh Eurobond. The bond issued at an interest rate of 6.3% for the 12-year bond is the fourth sovereign debt to be floated by the country under President Uhuru Kenyatta’s administration since 2014.

    The National Treasury reported that the offer that was oversubscribed has attracted bids worth Sh582.7 billion.

    Kenya hit its target of Sh108 billion on Thursday to get the loan whose principal will be paid back in two tranches.

    Dr Haron Sirima, the director general of the country’s debt management office said that he is struggling to reduce borrowing rates and lengthen repayment periods in attempts to ease pressure on the country’s cash flow.

    “We went to the market seeking to raise $1 billion and stuck to the discipline of our target amount despite the over-subscription and competitive pricing,” Sirima said.

    Public debt management office wants to ‘Amortise the bond’ so that the principal is paid in installments rather than one bullet to ease the rolling over of the bond when it will be due.

    Public Debt Management Office director-general DR. Haron Sirima [P/courtesy]
    “We are optimistic that Kenya will successfully execute liability management operations in the next fiscal year in line with the debt strategy of lowering cost and minimizing risks in the public debt portfolio.” he added.

    Dr Sirima also said that the move will spare the country the burden of looking for a huge amount of dollars to pay back the lenders at one go like will be the case in June 2024 when the $2 billion of the 10-year tranche of the infamous Eurobond issued in June 2014 becomes due.

    In 2019, the bond raised $2.1 billion in two tranches of $900 million priced at 7% for a seven-year paper and 8% for a 12-year, $1.2 billion tranche.

    Kenya’s commercial debt is mainly in eurobond and syndicated loans which accounted for close to 26% of external public debt last year.

    A debt review by the IMF has also revealed that the country’s loans from multilateral lenders sky-rocketed from $10.2 billion in 2019 to $13.7 billion in 2020.

     

     

     

     

  • Revealed: Chinese Contractor In Sh37 Billion Stalled Thwake Dam Is Blacklisted By World Bank

    Revealed: Chinese Contractor In Sh37 Billion Stalled Thwake Dam Is Blacklisted By World Bank

    Yesterday, Kenya Insights wrote about how the taxpayers are going to lose sh38 billion paid out as security advances and insuarence of sub-contractors of stalled and most not yet started dam projects.

    And today according to MPs’ report, the Chinese firm awarded the Governments tender to develop Sh37 billion Thwake Dam project had been blacklisted by the World Bank.

    Water Ministry transferred Sh37 billion for the Thwake Dam project in Makueni to a Chinese firm-China Gezhouba Group Limited. However the report by National Assembly Environment Committee revealed that the Chinese firm had been blacklisted by the World Bank over procurement irregularity. How did this pass the PS and CS secretaries who are directly involved in the proccurement process?

    Patrick Mwangi, the then Water Principal Secretary had disapproved the deal but was repealed after Public Procurement Oversight Authority cleared the firm.

    “China Gezhouba had been contracted to undertake the Thwake Dam project after being cleared by the Public Procurement Oversight Authority (PPOA) despite reservations by then Principal Secretary,” states the report tabled in Parliament.

    In what seems to be a proccurement to take this country deep in the real dam, the same blacklisted CGG firm was, apparently, also awarded Sh6.8 billion Northern Water Collector Tunnel tender in Murang’a by the Water ministry.

    But going with the history, Jubilee government has been dashing out multi-billion tenders to non existing firms or blacklisted ones.

    Take for instance, the Parliament blacklisted French firm Idemia, formerly IT Morpho after  irregular procurement of election equipment in the 2017 General Election. The same firm was awarded by the same IEBC to provide Huduma Namba technology worth Sh6 billion.

    In July last year, another firm that had been blacklisted back in 2013, Hydery (P) Limited was allowed to import 35,000 tonnes of sugar.

    This is a clear picture of how Jubilee administration is fighting corruption. Development bite and corruption spank to a country that is slowly rather openly being auctioned to foreign States in massive borrowings flowing in.