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AfDB approves €188 million loan for Kenya to fight COVID-19

23 May 2020, 09:25 am
Financial Nigeria
AfDB approves €188 million loan for Kenya to fight COVID-19

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The facility is aimed to strengthen Kenya’s health system to effectively respond to the pandemic, build economic resilience and ensure quick recovery.

African Development Bank President, Akinwumi Adesina, shakes hands with Kenyan President, Uhuru Kenyatta

The African Development Bank (AfDB) has approved the Kenyan government’s request for a COVID-19 Emergency Response intervention to the tune of €188 million ($204.8 million). The loan approval, which was announced on Friday, would support the government's efforts to address the health, economic and social impacts of the coronavirus pandemic.

According to a statement by the AfDB, the intervention fund will strengthen the East African country’s health system to effectively respond to the pandemic, build economic resilience and ensure quick recovery. The fund will also be used to support the poor and vulnerable people who have been negatively affected by the pandemic.

“We are very pleased to join other development partners in supporting the Government of Kenya’s efforts in mitigating the financial impact of the pandemic, especially in terms of the country’s expenditure in the health, social and economic sectors,” said Nnenna Nwabufo, AfDB’s Acting Director General for East Africa. “The next step will focus on helping build resilience for post-COVID-19.”

The novel coronavirus disease pandemic has placed significant strains on health systems and economies around the world. The pandemic has disrupted supply chains and caused job losses in Kenya’s tourism, hospitality, horticulture and airline industries, among others. As a result of COVID-19 shocks, AfDB said Kenya’s real gross domestic growth (GDP) growth for 2020 is projected to fall to between 0.6 and 1.4 per cent from the initial projection of 6 per cent.

The government’s response to the pandemic has included health-related containment measures, protection of the poor and vulnerable, provision of support to local businesses and sustaining jobs. AfDB said its intervention would support all these measures.

Prior to the approval of AfDB's intervention, the International Monetary Fund (IMF) approved $739 million on May 6 to support the Kenyan government's response to the COVID-19 pandemic. The amount is the equivalent of 542.8 million Special Drawing Rights (SDRs) (or 100 per cent of the country’s assigned IMF quota).

The emergency financing is being drawn under the IMF's Rapid Credit Facility (RCF). The international financial institution said the funding will help to meet Kenya’s urgent balance of payments need stemming from the outbreak of the pandemic.

The AfDB has also been providing emergency grants to help other countries in East Africa and the Horn of Africa, which have been contending with the desert locust outbreak that has been on rampage since last year in some countries in East Africa, Arabian Peninsula and South Asia. Over 13 million people in Djibouti, Ethiopia, Eritrea, Kenya and Somalia have already been affected by acute food insecurity as a result of the locust outbreak. For Kenya, the country is facing its worst swarms in 70 years.

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