Kenya seeks to unlock Sh151.2 billion World Bank funds

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Kenya is hoping to unlock up to Sh151.2 billion from the World Bank Group in the current 2026/2027 fiscal year as the multilateral lender remains the country's primary source of external financing in the absence of the International Monetary Fund (IMF).

A debt plan by the National Treasury for 2026 shows that Kenya expects funding from three World Bank support schemes, including: Sh94.2 billion from the Development Policy Operations (DPO), Sh52 billion from the Rapid Response Option (RRO), and Sh5 billion from the programme-for-results (PforR) window.

The DPO scheme provides vital budget support tied to institutional and policy reforms. It helps to ease heavy public debt pressures and fiscal deficits by funding governance, accountability, and social protection.

The RRO is a fast-disbursing mechanism which allows enrolled countries to immediately use up to 10percent of their undisbursed project financing balances to address emergency economic shocks such as disruptions caused by surging fuel and fertiliser prices.

PforR financing focuses on fund disbursement directly to the delivery of specific, verifiable program results. It helps countries improve public sector performance, build institutional capacity, and enhance transparency by releasing money only when agreed-upon milestones are met.

Kenya will be required to meet specific socio-economic outcomes to unlock funding under the DPO option, which will cover the final tranche of a three-part series first agreed upon in 2024.

Additionally, the country is obligated to disclose planned emergency spending to access Sh52 billion ($400 million) from the emergency RRO window, even as Kenya is widely expected to use the resources to mitigate the impact of flooding from the expected El Niño-induced rainfall from October this year.

Funding under the RRO is also subject to other legal and regulatory requirements.

“Notwithstanding the foregoing, the government may also consider other external financing options, subject to the applicable legal, regulatory and policy requirements including the Rapid Response Option,” the National Treasury said in its annual borrowing plan.

The World Bank has set more than 10 conditions to unlock the next Sh94.2 billion ($725 million) DPO tranche, including the disclosure of the personal interests of public officials and the publication of regulations to restrict unsolicited public-private partnerships deals, such as the flopped proposal by the Adani Group to upgrade the Jomo Kenyatta International Airport.

The World Bank approved the disbursement of Sh97 billion ($750 million) from the second tranche of the DPO at the end of June, after it disbursed Sh155 billion ($1.2 billion) in June 2024.

To secure the next disbursement, Kenya faces a series of demands from the World Bank.

Kenya must enact the proposed Whistleblower Protection Act, which seeks to ensure fair competition, value for money, and improved detection of misused funds.

The adoption of the law is expected to anchor declarations of personal interests by public officials, reviewed and verified by the responsible commissions, from a baseline of zero to 85 percent by 2028.

Kenya is also expected to amend the Companies Act of 2015 to align the beneficial ownership registry with updated Financial Action Task Force (FATF) standards. FATF is an intergovernmental agency that leads global action to tackle money laundering and terrorist financing.

The multilateral also requires changes to the Public Finance Management Act to ensure that any budget adjustments during implementation are strictly aligned with the fiscal aggregates approved by Parliament.

Kenya must also consolidate human resources and payroll data for all ministries, departments and agencies, counties, non-commercial State corporations, commissions and independent offices.

The first set of conditions for the third DPO seeks to improve the efficiency, transparency and equity of public finance, while the second aims to foster competitive and inclusive product and labour markets.

The final set of conditions focuses on strengthening climate action and includes the enactment of the Railways Bill, as well as regulations for the urban transport policy and the e-mobility policy.

Kenya previously requested emergency funding support from the World Bank under the RRO to mitigate the impact of the US war on Iran, but the country failed to detail its spending plans from the disbursement, causing a delay in financing.

The country has since identified the impending El Niño-driven heavy rains and flooding as a key economic risk in 2026 in its pitch for emergency funding from the World Bank.

“Yes, the government did request the RRO and has gone through the process of signing up for the option. We are currently in the process of figuring out exactly what expenditures the government would like to support during the time of crisis,” Anne Bakilana, an operations manager at World Bank Kenya, said last month.

“The vehicle created (to support emergency expenditures) can last up to a year and can finance any emergency that would happen during that period, including health sector emergencies, pandemics and flood emergencies.”

The World Bank is set to remain the key source of external concessional financing over the medium term as Kenya remains in protracted discussions with the IMF for a new funded programme.

Kenya has not budgeted for any new financing from the IMF up to at least June 2030 as it manages expectations of accessing monies from the fund but expects continued access to the World Bank’s DPO facility.

The country is set to continue its push for a new IMF facility shortly as the fund begins to assess the economy’s health under Article IV consultations.

Reporting originally appeared via Business Daily. Read the full source for additional context.