Kenya is expected to receive about $400 million in emergency financing from the World Bank within six weeks, according to a source familiar with the matter who spoke to Reuters.

The financing is being prepared as Kenya faces several risks, including high energy prices, El Niño-related disruptions and an Ebola outbreak in the region.

The funding would come through the World Bank's Rapid Response Option, an emergency financing facility. Kenya applied for the support after the start of the Iran war in February contributed to a sharp rise in crude oil prices.

Since then, the risks facing Kenya have extended beyond the impact of higher energy prices on government finances, the source told Reuters.

What would the money be used for?

The proposed financing would address several areas.

According to the source, the funds would help mitigate the effects of Ebola on the health sector, El Niño on agriculture and water resources, and high energy prices on the wider economy.

A World Bank spokesperson said the institution was supporting Kenya in finalising a framework that would allow the country to access rapid financing when an eligible crisis or emergency occurs.

The World Bank specifically referred to emergencies connected to the conflict in the Middle East and El Niño.

Kenya's finance ministry did not respond to Reuters' request for comment.

Ebola remains a regional concern

Ebola is one of the risks being considered under the proposed financing.

Reuters reported that more than 3,000 people had died in the worst Ebola outbreak in the nearby Democratic Republic of Congo. The outbreak also spread for a period into neighbouring Uganda.

The source said the proposed financing could help mitigate the impact of Ebola on Kenya's health sector.

El Niño is another risk

The financing is also intended to help address the effects of El Niño on agriculture and water resources.

According to Reuters, Kenya's most severe El Niño episode occurred in 1997, when heavy rains destroyed crops and damaged roads and homes.

The Rapid Response Option is intended to give Kenya access to financing when an eligible emergency occurs.

Why is the figure around $400 million?

The approximately $400 million figure is linked to Kenya's existing World Bank lending portfolio.

The source told Reuters that emergency financing for countries such as Kenya is typically capped at 10% of the country's undisbursed lending portfolio.

Kenya's World Bank project portfolio exceeds $7 billion, with about $3 billion disbursed or committed, Reuters reported.

However, the final amount has not been determined.

Kenya and the World Bank are finalising a Contingency Emergency Response Project, which will establish the terms of the financing. The eventual amount will depend on the undisbursed balance when the document is completed.

When could the money arrive?

The World Bank board has already cleared the projects supporting the Rapid Response Option.

The funds can be released once the relevant documentation has been finalised.

The source expects Kenya to receive about $400 million within six weeks, although the final amount could change depending on the undisbursed balance at the time the document is completed.

For now, the $400 million should therefore be viewed as an expected amount rather than a confirmed final disbursement.

The proposed financing comes as Kenya has been seeking additional sources of funding while rising debt repayments have put pressure on the government's fiscal space in recent years.

Source: Reuters