African Development Bank (AfDB) —one of Kenya’s biggest financiers— will restrict funding infrastructure projects to transport and water, in what it says will prioritise areas with the greatest potential to lift economic productivity.
The shift that will apply from this year to 2028 will see energy projects take a hit given that they are currently the third biggest beneficiaries of the pan-African lender’s portfolio in Kenya infrastructure funding.
The lender says that increased funding to the two sectors will significantly boost Kenya’s job creation agenda given the intense human labor needed to deliver the projects.
AfDB is the second biggest multilateral lender to Kenya and had 51 ongoing projects as at July last year, currently valued at Sh629.7 billion (UA 3 billion). UA refers to unit of account which AfDB uses as its currency and which is now equivalent to Sh209,920 per unit.
“The Bank will adopt a different approach to selectivity, narrowing the broad infrastructure projects to only two sectors, namely transport, and water and sanitation, to enhance productivity and competitiveness, noting that water will involve dams and irrigation that support greater agricultural productivity,” AfDB says in a review of its Kenya funding programme.
AfDB’s disclosures show that transport projects account for 37 percent of the total funding to Kenya followed by water and sanitation at 20 percent, energy (17 percent), finance (13 percent) and agriculture (seven percent).
The lender adds more focus on roads will improve transit time for public service vehicles from 40 km/hour in 2022 to 60 km/hour in 2028 and cut transport operating cost from an average of $0.85 (Sh135.06) to $0.50 (Sh79.74) per vehicle/km in the same period.
Increased funding of water projects is expected to drive water used by industries to 16,000 cubic metres per day in 2028 from 1,500 cubic metres in 2022 while water treatment capacity will increase to 6,000 cubic metres from 1,000 cubic metres in the same period.
AfDB is the second biggest multilateral lender to Kenya and had 51 ongoing projects as at July last year, valued at Sh629.7 billion (UA 3 billion).
The World Bank through its development finance institution, International Development Association, is the leading multilateral lender to Kenya at Sh1.57 trillion.
Some Sh500.4 billion (UA 2.384 billion) of the AfDB’s funding has gone to the public sector or projects guaranteed by the government and the remaining Sh129.8 billion (UA 618.7 million) to private entities.
Kenya is struggling to contain a high rate of youth unemployment and skyrocketing debt servicing obligations have squeezed funds available for development projects that are key to creating jobs.
The private sector has also been weighed down by increased taxation, adding to the struggles of recovering from the Covid-19 pandemic fall-out, making it increasingly hard for firms to create new jobs.
Kenya is racing against time to widen public transport, water and sewerage systems to accommodate the rapid urbanization.
Lack of climate resilience given frequent shocks, namely, storms, floods and torrential rains poses greater risks of damage to the infrastructure.
Some of the big projects that AfDB has funded in Kenya include the Sh17.7 billion ($111.3 million) dialling of the Kenol-Sagana-Marua Road and the Last Mile Electricity Connectivity programme meant to link low-income Kenyans to electricity.
The AfDB is also partly financing the Sh87.1 billion ($546.7 million) Thwake Dam project to supply Makueni, Machakos and Kitui water and generate electricity.
