Uhuru Kenyatta ends France visit, secures Sh18bn loans, grants

What you need to know:

The parties signed four financing agreements in support of emergency health response, the opening up of rural areas, public transport and access to water and sanitation services.
The visit also saw AFD grant a Sh10.74 billion loan to Equity Bank to support Kenya’s small and medium enterprises (SMEs).

Kenya has signed loan agreements worth Sh17.91 billion with France and the European Union (EU) as President Uhuru Kenyatta wraps up his State visit to that country.

The parties signed four financing agreements in support of emergency health response, the opening up of rural areas, public transport, and access to water and sanitation services.

On Friday, President Kenyatta witnessed the signing of finance agreements for a Sh3.78 billion concessional loan in support of Kenya's emergency response to the Covid-19 pandemic.

The loan will be directed to specific health budget lines in support of Kenya’s national referral services and maintenance of equipment for patients’ treatment.

President Kenyatta also witnessed the signing of a Sh8.82 billion loan for the Lake Victoria Water and Sanitation Project (LVWATSAN), which aims to improve access to water and sanitation services in Kisumu.

The signing will pave the way for the implementation of the project financed by a Sh2.52 billion concessional loan from the French development agency AFD, a Sh4.41 billion concessional loan from the European Investment Bank (EIB) and a Sh630.63 million grant from the EU.

Kenya is expected to provide Sh1.26 billion in counterpart financing.

“Thousands of Kenyans living on the shores of Lake Victoria will benefit from the financial support that will further reinforce the positive social and environmental impacts of this impressive water project,” AFD CEO Rémy Rioux said.

The water project, which will be implemented by the Lake Victoria South Water Works Development Agency, is expected to expand the water and sanitation distribution network in Kisumu, including to informal settlements and the satellite towns of Ahero and Maseno.

Additionally, there will be a component for water quality monitoring for Lake Victoria, aimed at protecting this shared regional water resource and ensuring the treatment process is more efficient.

Road deals

The second financing agreement saw Treasury Cabinet Secretary Ukur Yatani sign for an arid and semi-arid lands (ASAL) rural roads improvement project, which will open up the northern rural areas of Kenya through road improvement works.

The project is financed by a concessional loan of Sh7.56 billion from AFD and a grant of Sh3.78 billion from the EU, to be implemented by the French development agency.

The road rehabilitation project will improve mobility and access in the six ASAL counties of Isiolo, Laikipia, Marsabit, Meru, Samburu, and Tharaka-Nithi.

The project involves the upgrading of 1,280 km of roads to all-weather standards and improving 139km of roads to bitumen standards.

“The upgraded roads will improve access to markets, schools, hospitals, security services and other government services for the local population,” AFD said in the statement.

“In addition, the improved accessibility will enable the communities to easily market their agriculture and livestock products and promote tourism.”

The other agreement was for a Sh189.2 billion grant aimed at financing a comprehensive technical assistance for improvement of Nairobi’s public transport.

“The grant to Kenya Railways Corporation, for the implementation of the Commuter Rail Master Plan, thus complements the proposed infrastructure financing by the French Treasury (commuter rail link from the airport to Nairobi’s central railway station),” AFD said in the statement.

It will also support integrated planning of urban mobility and support for implementation of the Bus Rapid Transit project.

It is also expected to cover coordination and capacity building of the Nairobi Metropolitan Area Transport Authority (Namata) in partnership with a French public institution (Codatu) with the same mandate.

SMEs support

The visit also saw AFD grant a Sh10.74 billion loan to Equity Bank #ticker:EQTY to support Kenya’s small and medium enterprises (SMEs).

This project is expected to support about 240 SMEs and more than 5,000 direct and indirect jobs over the coming years.

This is Proparco’s (France private sector branch) second operation with Equity after an initial Sh2.45 billion loan granted in 2019 as part of a Sh10.74 billion financing arranged by Proparco in partnership with the German DFI, DEG.

“The impact of the Covid-19 pandemic started as a health crisis, which quickly became an economic crisis and a humanitarian crisis that has seen almost 40 per cent of Kenyan small business owners affected by the great economic shutdown in business,” said James Mwangi, CEO of Equity Group Holdings.

“This partnership with Proparco will help us to support the quick recovery of their businesses and most importantly their growth out of the crisis."

It will also strengthen disease surveillance and control, especially in counties, and help improve testing capacities, the AFD said in a statement.