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World Bank approves $750 million loan for Kenya’s COVID-19 recovery

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The World Bank, in an effort to accelerate Kenya’s ongoing inclusive and resilient recovery from the COVID-19 crisis, on Thursday approved a $750 million loan for the East African country.

The fund is under the Development Policy Operation (DPO) programme of the World Bank. It is expected to strengthen fiscal sustainability through reforms that contribute to greater transparency and the fight against corruption.

According to the World Bank, its finance policy provides rapidly-disbursing financing to help a borrower address actual or anticipated development financing requirements.

DPF supports borrowers in achieving sustainable, shared growth and poverty reduction through a program of policy and institutional actions aimed at, for example, strengthening public financial management, improving the investment climate, addressing bottlenecks to improve service delivery, and diversifying the economy”.

The Washington-based lender said the loan is on concessional terms at an interest rate of about 3%, and will help the East African nation enhance the performance of its domestic debt market, reform the electricity industry and improve governance,

“The government’s reforms supported by the DPO help reduce fiscal pressures by making public spending more efficient and transparent, and by reducing the fiscal costs and risks from key state-owned entities,” Alex Sienaert, senior economist for the World Bank in Kenya, said in the statement.

It’s the fourth time in three years that Kenya has tapped the DPO facility, bringing cumulative borrowing to $3.25bn. East Africa’s biggest economy received $750m in June last year, $1bn in May 2020, and $750m in 2019. Requests for DPOs are presented to the World Bank’s board after the implementation of agreed reforms.

Critics of the World Bank argue that its loans are a mechanism of forcing free-market economics on countries through coercion. Countries with a debt crisis, whatever their other characteristics, agree to the bank’s package of legal and economic reforms, and the bank agrees to lend them money. Argentina, Ecuador, and India have all either weakened their labour legislation or amended their land laws to qualify for an adjustment loan. India is reported to have changed 20 pieces of major legislation.

Kenya consented to a raft of measures to secure the funding, including shifting government procurement to a new electronic platform to make transactions more transparent and reduce opportunities for corruption, the lender said. By the end of 2023, the programme aims to have five strategically selected ministries, departments, and agencies procuring goods and services through the electronic platform, it said.

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World Bank predicts Mozambique economy growing at 5.7% on average

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The World Bank has predicted that the economic growth in Mozambique is expected to accelerate in the medium term averaging 5.7% between 2022 and 2024, as a result of demand recovery and economy benefits from the start of liquefied natural gas production this year.

In a report released Thursday, the World Bank said the start of LNG production at the offshore Coral Project and the expected resumption of other LNG projects would help spur the southeast African nation’s growth in the intervening year.

The World Bank said a three-year extended credit facility arrangement agreed by Mozambique with the International Monetary Fund (IMF) and budget support from other partners would further help to strengthen its economic recovery.

The IMF’s executive board had, in May, approved a $456 million program for the country, the first since the global lender suspended support to Mozambique six years ago.

However, the World Bank warned that risks remained for Mozambique’s growth, especially from rising import prices due to the conflict in Ukraine, a possible surge in COVID infection waves, and insurgency in the north.

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Nigeria, Algeria, Niger to revive Saharan gas pipeline talks

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The governments of Nigeria, Algeria and Niger Republic have held talks to revive a gas pipeline project across the Sahara which had been put on hold for over 40 years, with the potential opportunity for Europe to diversify its gas sources as the world faces a short fall as a result of the Russian-Ukraine war.

The three countries, represented by their various Petroleum Ministers, met in Abuja, Nigeria’s capital on Wednesday and resolved to set up a task force to revive the project and designated an entity to update the feasibility study.

A statement by Niger’s Oil Ministry after the two-day meeting stated that the Trans-Saharan gas pipeline project estimated at $13 billion, could send up to 30 billion cubic metres a year of supplies to Europe.

The statement added that the energy ministers of the three countries will meet again in Algiers at the end of July to “validate the proposals of the newly installed task force.”

“The pipeline should allow Europe to diversify its sources of natural gas supply but also allow several African states to access this high value energy source,” the statement said.

“With a length of 4,128 kilometres (2,565 miles), the pipeline would start in Warri, Nigeria, and end in Hassi R’Mel, Algeria, where it would connect to existing pipelines that run to Europe,” it said.

The gas pipeline idea was first proposed more than 40 years ago with an agreement signed between the three countries in 2009, but progress stalled stalled following a lack of follow through by the countries.

Earlier this month, Nigeria also took steps to revive another gas pipeline project that would pass through West Africa, Morocco to Europe.

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