Kenya is not “on the brink” right now, but it faces a host of problems. Inflation is high, and getting higher. The shilling dipped to record lows this summer. Drought in the Horn of Africa, which affects northern Kenya, pushes food prices higher and drives pastoralists from their homes. Thousands of refugees from Somalia are pouring into the country. In Nairobi, politicians are wrestling with the Constitutional Implementation Commission over the passage of bills necessary for the promulgation of the new constitution. Meanwhile, some of Kenya’s most prominent public figures are headed to The Hague for the last major legal step before their trials – on accusations of fomenting violence after the 2007 elections – begin. In short, Kenyan authorities have a lot on their plate.
The money will be used to supplement existing projects in agriculture, health and water and sanitation and to scale up medium-term to long-term interventions in energy and water resources management.
The additional funding will be used to diversify pastoralists’ livelihoods, provide seeds to farmers, treat malnutrition, drill and repair boreholes and provide cash transfers to orphans and vulnerable children.
The timing and size of the loan suggest to me that the Bank is worried about Kenya, although perhaps not severely so. Their latest economic assessments of the country (see below) have acknowledged the difficulties of the present while expressing optimism about the future.
During the last major drought, in 2009, the Kenyan government was harshly criticized for alleged inaction. Perhaps this year will see a more aggressive response to the crisis by Nairobi and its partners.
VOA has more details about how the loans will be used.