The credit amount will have a grace period of ten years and a maturity period of 40 years.
The Energy Sector and Recovery project aims to enhance the policy, institutional and regulatory environment for private sector participation and sector development, by supporting efficient expansion of power generations capacity to meet the economy’s projected supply deficits by 2006/2007, and by increasing access to electricity in urban, peri-urban and rural areas, while improving the efficiency, reliability and quality of electricity services to current consumers. The main development objective is to support investments needed to: improve the quality and efficiency of power system operations; meet power demand through implementation of economic options; and improve access to electricity to the urban poor.
In the past two decades, Kenya has experienced a slowdown in growth across all economic sectors, and increased poverty from 48% of the population in 1990 to about 56% in 2003.
Agriculture grew by just about 1% while the manufacturing sector faced stagnating investment and negative productivity. The quality of delivery of energy and other infrastructure services declined. Only about 9,5% of the population have access to electricity supply. The use of household commercial fuels to substitute for fuel wood and biomass use, which is causing acute depletion of the country’s forest resource, is among the lowest in sub-Sahara Africa on per capita consumption basis.
The combined effects of poor economic governance, weak enforcement of accountability, and uncertain political environment led to a significant decline in official donor assistance and private capital inflows, and high perception of risk by private investors.
In an attempt to turn economic performance around and reduce poverty, the Kenyan government has formulated an Economic Recovery Strategy for Wealth and Employment Creation which emphasises accelerated economic growth and employment creation, increased productivity across all sectors, provision of basic needs and equitable distribution of national income.
The Energy Sector Recovery Project is part of this institutional reform and has an expected total price tag of more than $200-million.
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