World Bank lending arm pledges Sh87bn for projects this year

Politics and policy

A road under construction. IFC mainly invests in infrastructure. PHOTO | FILE 

By ALLAN ODHIAMBO, aodhiambo@ke.nationmedia.com

In Summary

• The allocation is a marginal increase of 2.6 per cent from 2014 when IFC committed Sh84.8 billion.
• The agency mainly invests in infrastructure, agribusiness, health, education and financial services in Africa.

The International Finance Corporation (IFC), the World Bank Group’s private sector lending arm, has committed a portfolio of Sh87 billion for projects in Kenya this financial year ended June 30, the second highest for sub-Saharan Africa after Nigeria.The allocation is a marginal increase of 2.6 per cent from 2014 when IFC committed Sh84.8 billion, its annual report for 2015 indicates.

The agency mainly invests in infrastructure, agribusiness, health, education and financial services in Africa.

So far, the IFC has disclosed funding in five projects in Kenya this year, expanding its activities in the local market as companies benefited from relatively easier access to long-term finance to fund their growth.

In a latest disclosure, the IFC and the Global Agriculture Food Security Programme (GAFSP) plan to give a Sh2.6 billion loan to Kenya Tea Development Agency for the development of 16-megawatt (MW) hydro-power dams and transmission lines in various parts of the country.

The IFC and GAFSP will each invest Sh1.3 billion in the renewable power project that will comprise seven run-of-the-river small hydro-power plants (SHPs). The overall project is estimated to cost Sh8.9 billion ($85.6 million).

“The SHPs will provide captive power generation for KTDA’s tea factories, and will sell any excess to state-owned utility company, Kenya Power Company Limited,” IFC said in a disclosure last week.

READ: KTDA gets Sh3bn loan for 7 hydropower plants

The Global Agriculture and Food Security Programme is a multilateral mechanism to assist in the implementation of pledges made by the G20 in Pittsburgh in September 2009. GAFSP includes both a public and private sector financing window. The private sector window is managed separately by IFC, which is the private sector lending arm of the World Bank.

Earlier this month, Africa Oil, Tullow Oil’s partner in exploration, said it had closed a Sh5 billion equity sale to IFC.

The deal, which was first announced mid-August month, puts the oil company in a position to fund oil and gas exploration, appraisal and development activities.

Like Africa Oil, several companies have been on the cash-hunting trail this year as they seek to expand exploration and appraisal activities following several oil discoveries in northern Kenya.

Bread maker Kenblest Group is also negotiating a Sh1 billion loan with the IFC to partly finance the Sh2.2 billion expansion of its milling business in Thika.

Kenblest, a 33-year-old family-owned business, started upgrading and expanding its three constituent businesses – a bakery, wheat and maize milling factories – in April and is expected to complete the project by December.

The bread maker had initially entered into an agreement with KCB for the Sh1 billion credit line but says it has since decided to secure the funds from IFC due to the high interest rates regime in Kenya.