Energy and Infrastructure Take 42 Per Cent of Kenya External Loan

Posted on : Monday , 7th December 2015

The bulk of donor funding to Kenya goes to energy and infrastructure projects, a latest National Treasury debt report released in Nairobi showed Wednesday.

The report says energy and infrastructure sector takes 42 percent of the cash Kenya gets from its bilateral and multilateral lenders, with the external debt currently standing at 14.7 billion U.S. dollars.

Kenya is undertaking dozens of projects in the energy and transport sectors.

In the transport sector, they include the construction of the standard gauge railway, the Lamu port and various road projects in different parts of the country.

Most of these infrastructure projects are joint ventures between the Kenya government and other countries, in particular, China.

Similarly, in the energy sector, several projects funded by both donors and the Kenya government are ongoing. They include the wind and solar power projects in Northern Kenya and the coal mining in Eastern part of the country.

In June 2013, the energy and infrastructure sector received 37 percent of the total external public debt, which then stood at 9.8 billion.

The increase of about 5 percent in donor funding in the last two years shows how the East African nation is striving to expand power generation and the transport network.

Following the sector in getting donor funds are public administration and governance sector, which stand at 23.4 percent, up from 20 percent in 2013.

Commerce and labour affairs comes third at 11.2 percent and environment sector fourth at 9 percent. Agriculture, which is the backbone of Kenya’s economy, comes in fifth at 6.3 percent.

Health and education sectors receive the least amount of external financing from the bilateral and multinational lenders.

“Overall, public and publicly guaranteed external debt increased to 14.7 billion dollars in August, from 14.2 billion dollars in July,” says the report.

Treasury attributed the rise to currency fluctuation, with Kenyan shilling weakening to 106 against the U.S. dollar before stabilising at the current 102.

According to the Treasury, official creditors account for 80 percent of total public and publicly guaranteed external debt.

In the multilateral category, African Development Bank and International Monetary Fund account for the largest proportion of external credit, while China, France and Japan are the leading creditors in the bilateral category.