Kenya Set to Receive $400 Million in World Bank Emergency Financing

Kenya is expected to receive approximately $400 million in emergency financing from the World Bank within six weeks, a source familiar with the matter said, as the East African country confronts a broadening set of economic and health risks.

Kenya applied for the World Bank's Rapid Response Option after the outbreak of the Iran war in February pushed crude oil prices sharply higher. The risks have since expanded beyond energy costs to include an Ebola outbreak in the region and the El Niño weather phenomenon.

A World Bank spokesperson said the lender is helping Kenya finalise a framework to access rapid financing when "an eligible crisis or emergency occurs, including the conflict in the Middle East and El Niño," without giving further details. Kenya's finance ministry did not respond to a request for comment.

The financing is intended to soften the impact of Ebola on the health sector, El Niño on agriculture and water resources, and high energy prices on the wider economy. More than 3,000 people have died in the worst Ebola outbreak in the neighbouring Democratic Republic of the Congo, which also spread for a time into Uganda, Kenya's direct neighbour. Kenya's most severe El Niño episode, in 1997, brought months of heavy rain that destroyed crops and damaged roads and homes.

Emergency financing for countries such as Kenya is typically capped at 10% of a country's undisbursed lending portfolio, which would give Kenya access to roughly $400 million, the source said. Kenya's World Bank project portfolio exceeds $7 billion, of which about $3 billion has been disbursed or committed.

The two sides are finalising a Contingency Emergency Response Project that will set out the funding terms, with the final amount depending on the undisbursed balance at the time of completion. The World Bank board has already cleared the projects underpinning the Rapid Response Option, allowing funds to be released once the document is finalised.

Kenya has been seeking new sources of financing as rising debt repayments have squeezed its fiscal space in recent years.