News

France to extend soft loans to Kenya, e.g. for geothermal drilling at Olkaria

Alexander Richter 22 Feb 2010

Kenya will enjoy a special line of credit, including concessional loans, drawn from the Emerging Countries’ Fund of France, which will be used for drilling efforts at the Olkaria project.

In news from Kenya, it is reported that “Kenya is set to receive additional soft loans from France following a review of the terms of economic relations between the two states.

The review, which ranked Kenya among emerging economies, is also expected to enhance public-private partnerships in the country.

By entering the new category, Kenya will enjoy a special line of credit, including concessional loans, drawn from the Emerging Countries’ Fund, which require approval from the French Parliament.

Christian Saillarb, an official in the French Embassy’s economic section said the additional funding would target technological advancement in the transport sector, geothermal energy and the telecommunications industry.

“The support is on condition that the government does not make profits from these projects,” Mr Salliarb said.

The elevation of Kenya to the club of emerging economies was announced by the French Foreign Secretary in charge of Trade, Anne Marie Idrac during a recent visit in Nairobi, to preside over the signing of a financing agreement for the development of the Jomo Kenyatta International Airport.

The first round of French support is expected in Kenya this year while talks are ongoing for support in geothermal power production.

The French government intends to finance the drilling of geothermal wells in Olkaria and will also supply drilling equipment.

The new terms of economic relations will also see Kenya tap into France’s long experience in harnessing public-private partnerships to drive economic growth.

Mrs Idrac explained this would involve the participation of both local and French companies in order to “curb inefficiencies as is common with such partnerships in Africa.”

The French government also intends to facilitate information exchange and training on different aspects.

Proparco, an arm of AFD that specialises in financing the private sector, will be roped in to provide technical assistance in a move intended to generate interest from other donor organisations.

Mr Salliarb said the public-private partnerships would be rolled out — in the water and energy sectors.

Kenya becomes the second country in Africa to join France’s club of 14 emerging countries after South Africa.

Other countries that have benefited under the same program are Vietnam, Singapore, Indonesia and India.”

Source: The East African