Kenya chalks up $4.2 billion debt in four months

Saturday January 13 2018

Public debt

Kenya has borrowed more than $4.2 billion in the first four months of the current financial year 2017/2018.  

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Kenya has borrowed more than $4.2 billion in the first four months of the current financial year, with a huge chunk of it going into energy, water and education sectors.

Treasury documents show that the larger part of this debt was picked up from eternal lenders, with $300 million sourced from domestic market.

Local commercial banks recorded a drop in lending to government during this period, even though their lending increased by 40 per cent to $6.8 billion, compared with $4.3 billion in September 2016.

The largest debt facility was a $750 million syndicated loan from Eastern and Southern Africa Trade and Development Bank (TDB) taken in second half of last year to pay one of the previous syndicated loan arrangers.

A debt report submitted to parliament by Treasury shows that Kenya also took out a $521 million loan from Unicredit SPA, a private commercial bank headquartered in Italy for developing infrastructure at the Konza Techno City project. Its repayment will start in June 2020, in 20 instalments of $71.2 million each.

China, through its Exim Bank, continues to be the country’s major financier, lending Nairobi $638.2 million to improve electricity transmission and a further $278.75 million to finance the underground electric power distribution network within Nairobi.

Power projects

Other sizable debts the country has taken include the $83.62 million out of the expected $135.12 million from the European Investment Banks (EIB) for the expansion of Olkaria I and IV geothermal stations.

This funding was a follow up to the March 2017 signing of the letters of intent, between Treasury Cabinet Secretary Henry Rotich and EIB vice president Pim van Ballekom for an extension of the existing Olkaria I geothermal plant.

The funds Kenya received will be used to support the addition of a 70MW turbine, construction of the necessary wells, steam gathering system and interconnection facilities.

In the past four months, the International Development Association, an arm of the World Bank, also advanced Nairobi $155.72 million for the Off Grid Access project that was approved in July last year.

The funds were meant to help Kenya’s marginalised communities access energy through off-grid solar, with one of the biggest projects in advanced stages in Garissa.

The World Bank soft lending agency has also lent the country more than $450 million for urban infrastructure development.

Data from the Treasury for the first quarter of the 2017/18 financial year shows that the stock of GDP increased to $20.19 billion in September 2017, from $17.6 billion in a similar period in 2016.