Kenya is seeking about $450 million in emergency financing from the World Bank to shield its economy from mounting external shocks, including the impact of the conflict in Iran and the threat of extreme weather later this year.
According to people familiar with the discussions, the East African nation is finalising arrangements for a Contingent Emergency Response Project (CERP). This World Bank mechanism allows countries to redirect existing project funds to respond to crises quickly.
The financing is expected to be available by October, although the amount and timeline could still change.
Unlike a conventional loan, the facility reallocates up to 10% of undisbursed funds from a country’s existing World Bank projects, enabling governments to respond rapidly to emergencies without taking on additional debt. The arrangement can remain in place for up to six years, with countries able to access the funds multiple times if qualifying emergencies arise.
Kenya first announced plans to activate the emergency financing window in April, when Central Bank Governor Kamau Thugge disclosed the government’s intention to tap the facility. Neither the National Treasury nor the World Bank commented on the latest negotiations.
Economic headwinds drive demand for support
The funding comes at a difficult time for Kenya’s economy. The government is facing mounting debt repayments, delayed payments to suppliers and weaker-than-expected tax revenues, leaving little fiscal room to respond to unexpected shocks.
Economic pressures have intensified following the recent conflict involving Iran, which disrupted global oil markets and pushed up crude prices. The World Bank expects Kenya’s economic growth to slow to 4.3% this year from 4.6% in 2025, marking its weakest expansion since the COVID-19 pandemic. The government has already reduced value-added tax on fue
The country is also preparing for the possibility of a strong El Niño event later this year, which could bring above-average rainfall across East Africa. While increased rainfall may benefit some regions, it also raises the risk of flooding, infrastructure damage, crop losses and disruptions to Kenya’s agriculture-dependent economy.l to ease pressure on consumers.
Source: Africabusinessinsider