European Union States in new financing plan, set aside Sh333b for Vision 2030

Europe is changing the way it finances development in Kenya, a move it says will make its member States more accountable, controlled and coordinated.

The Head of Development, European Union in Nairobi, Eric Habers says nine European Union members are jointly pooling resources to fund development projects in Kenya to the tune of €3 billion (Sh333 billion at the current exchange rate) spread over the next three years.

“Nine of our member States sat together...and this doesn’t happen here in Kenya alone but all over the world. We want to operate as one,” Mr Habers told Weekend Business in an interview, in reference to a new financing strategy. “The aim is to look at ways to more effectively spend our funds,” he said. In the next three years, the nine countries—United Kingdom, France, Sweden, Germany, Denmark, Finland, Netherlands, Italy and Czechoslovakia, plan to spend €3 billion including both grant and loan assistance.

He said the amount would support projects outlined in Vision 2030’s Medium Term Plan 2013-2017 period. The targeted sectors include agriculture, rural development and arid and semi-arid areas (ASALs), energy and transport, democracy and governance, justice and the rule of law, and water and sanitation. The amount, Habers said, would be committed under the Joint Programme Strategy between Kenya and the European economic unit.

The funding comes at a time when Kenya is struggling to meet its revenue collection targets amid growing spending needs. This has seen the Government seek support from donors to finance multi-billion shilling Vision 2030 flagship projects, for example, the Sh1.2 trillion Standard Gauge Railway line and Sh130 billion -700 MW liquefied natural gas (LNG) factory at the Coast.

Other projects include the Sh24.6 billion laptops plan for Standard One pupils and the Sh400 billion one million-acre Galana/Kulalu irrigation projects and the Lamu Port Southern Sudan-Ethiopia Transport (Lapsset) Corridor.

Last year, the EU and its member countries disbursed €760 million (Sh84.36 billion) towards Kenya’s development. The new plan, Habers said aims to lower red-tape when dealing with the National Treasury since most of the member states disburse funds through the government.

Putting special focus

In agriculture, the EU through Kenya Rural Development Programme (KRDP), has contracted 500,000 farmers as beneficiaries in Northern Kenya. This will improve drought resilience for 1.6 million households. Under this, KRDP is also supporting the Kenya Cereal Enhancement Programme to the tune of €140 million (Sh15.54 billion) with contribution of IFAD and the private sector.

Netherlands, part of the EU is working to strengthen the agriculture production and marketing systems. Equity Group, through its foundation is running the project with funding support of €4.6 million (Sh510.6 million) from Netherlands Embassy in Kenya. This supports middle sized farmers expand their influence in the agricultural sector.

In energy, Habers said the EU countries are putting special focus on the modenisation of infrastructure, increasing the share of energy generated from renewable sources. The European Investment Bank (EIB) and the EU are supporting the development of the €613 million (Sh70 billion) Lake Turkana Wind project which once completed will inject an additional 310 MW to the national grid.

The EU is funding the Nairobi Missing Links Roads and Non-motorised Facilities project that will help decongest the eastern side of the city—reducing thousands of hours that the residents spend in traffic jams.

The €45 million (Sh4.995 billion) traffic decongestion project is implemented in collaboration with the Ministry of Transport and Infrastructure and the Kenya Urban Roads Authority (KURA). The construction works started in 2014 and completion is expected by end of 2016.