, NAIROBI, Kenya, May4 – Kenya will receive a Sh3.5 billion ($37million) credit from the World Bank Group under a new finance program.
The loan is aimed at improving financial stability by ensuring more affordable and long term financing in the country under the new program dubbed Kenya Financial Sector Support Project.
“Kenya’s financial sector is the third largest in sub-Saharan Africa and it makes a significant contribution to economic growth and job creation,” World Bank Country Director Diarietou Gaye explained.
“The opportunity for Kenya now is to transform the financial sector to provide more affordable and longer term credit to contribute effectively to growth and shared prosperity,” she said.
The program will focus on banks, insurance and pension schemes through a more targeted approach that supports solutions to specific constraints that curtail economic growth and the job creation of the private sector.
This will be aimed at improving investment opportunities for institutional and foreign investors.
Primary beneficiaries of the program will be the National Treasury, and financial sector regulators including the Central Bank of Kenya (CBK), Capital Markets Authority (CMA), Retirement Benefits Authority (RBA) Insurance Regulatory Authority (IRA) and the Sacco Societies Regulatory Authority.
It will also support the Kenya Deposit Insurance Corporation and the Public Debt Management Office.
The new program builds on the reforms that have been supported by the Financial and Legal Sector Technical Assistance Project in the past decade.
Financed by the bank credit of Sh1.7 billion ($18million) and co-financing of Sh946 million ($10 million) from Britain’s Department for International Development, the latter project was approved by the bank in October 2004 and closed in March 2013.
The World Bank now says the critical need is to consolidate these gains by addressing the remaining gaps and weaknesses in the financial markets, especially as they relate to long term financing needs of Kenya’s development agenda.
“The new facility will also facilitate access to and reduce the cost of finance, which are identified as constraints to business growth and job creation” Senior Financial Sector Specialist Smita Wagh says.
The Bank’s Country Partnership Strategy (CPS) for Kenya and the government’s Vision 2030 identify access to finance as critical to enhancing the prospects for Kenya’s growth, regional competitiveness, and shared prosperity.
The World Bank Group pledges to continue to support efforts to increase financial access to improve the enabling environment for private investment, which plays a critical role in Kenya’s development process.