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Capital Markets

Kenya allowed to tap Sh1trn AfDB emergency fund

National Treasury building
National Treasury building. FILE PHOTO | NMG 

Kenya is among member countries allowed to tap a Sh1 trillion ($10 billion) emergency fund announced on Wednesday by the African Development Bank (AfDB) to help alleviate sudden economic disruptions caused by the Covid-19 outbreak.

Deputy director-general for East Africa Nnenna Nwabufo told the Business Daily in a telephone interview the government and private businesses can access the funds for budgetary and business support and to help blunt the effects of disruption.

She cited the need by the government to support critical sectors such as the airline industry, tourism and health, all of which have been heavily impacted by the crisis.

“This crisis response facility is to support the governments and the private sector meet obligations and ride through this crisis,” she said.

Ms Nwabufo said the funding would be fast-tracked to borrowing countries and added the loans have “favourable” concessional terms.

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The facility entails $5.5 billion for sovereign operations in African Development Bank countries and $3.1 billion for sovereign and regional operations for countries under the African Development Fund, the bank group's concessional arm that caters for fragile countries. An additional $1.35 billion will be devoted to private sector operations.

AfDB President Akinwumi Adesina said in a statement, the package took into account the fiscal challenges that many African countries are facing.

"Africa is facing enormous fiscal challenges to respond to the coronavirus pandemic effectively,” he said.

“This facility will help African countries to fast-track their efforts to contain the rapid spread of Covid-19."

The latest fund comes at a time Kenya has turned to Bretton Woods institutions for emergency help to blunt effects of the coronavirus economic fallout.

Kenya is seeking Sh122.5 billion ($1.15 billion) emergency funding from the International Monetary Fund and the World Bank to support the slowing economy in the face of the crisis. Last month the African Export-Import Bank set up a similar fund to help mitigate the effects of the virus in Africa.

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