NAIROBI, Kenya, Jun 21 – Kenya has signed a Sh14.7 billion credit facility agreement with France to finance the Mwache Dam project with the aim of improving drinking water and sanitation systems in Mombasa.
Treasury Cabinet Secretary Henry Rotich says the facility, extended by Agence Francaise De Developpment, comes with a1.46 percent interest rate per annum, and has 20 years repayment period including an 8 years grace period.
“We expect the dam to serve the entire Mombasa County. We expect the dam to be completed in three years,” Rotich told the media.
Treasury has also signed a credit facility agreement for a non-sovereign loan of Sh7.2 billion for Meru Wind project between Kenya Electricity Generation Company and AFD.
Treasury also signed two statement letters that include one in support of the implementation of public finance management reforms at a cost of Sh3.6 billion and another in support of the electricity transmission network at a cost of Sh11.2 billion.
The loans come at a time when there’s been a back and forth on whether the country’s debt is manageable.
Earlier this week, Barclays Africa Senior Economist Samantha Sigh said Kenya’s debt levels should not be of concern at this stage, but the country should focus on raising enough revenue to finance that debt.
Sigh was speaking at a post-budget analysis meeting following the budget speech last week by National Treasury where the government revealed that it will be spending more than a half of the country’s domestic revenue to clear maturing debts, including the Sh220 billion 2014 Eurobond.
Debt service for the coming financial year is expected to reach Sh870.6 billion, which represents a 25.79 per cent compound growth from three years ago.