World Bank, Kenya’s biggest lender, on Sunday, March 24, announced that it would be posting a list of debt defaulters starting next week.
This was revealed by World Bank President Ajay Banga who was speaking at the China Development Forum.
According to Banga, publishing a defaulter list is part of a wider scope to make publicly available proprietary data routinely.
The rationale of this decision is to attract more private-sector investment to developing countries like Kenya.
While the World Bank has been key in funding development projects in emerging economies, Banga noted that the bank was taking action on a number of fronts to overcome barriers holding back private sector investment in third-world countries.
For the last two decades, the World Bank observed that developing countries had an average growth rate of between 4 and 6 per cent which does not instill private sector investment confidence.
Kenya on its part, is expected to see its economy grow by 5 per cent in 2024 which is among the highest growth rates in the African continent.
With the World Bank’s decision, Kenya will need to religiously honour its debt obligations so as to get a positive rating and attract more private investors.
As of June 2023, Kenya had an outstanding loan of Ksh1.6 trillion from Word Bank subsidiaries.
According to data from the National Treasury, between July and December 2023, Kenya paid Ksh32 billion to the International Development Association (IDA), a World Bank subsidiary.
Over the same period, Kenya also paid another World Bank subsidiary, the International Bank for Reconstruction and Development, Ksh3.8 billion.
Despite using much of its collected revenue to service foreign debt, President William Ruto has assured foreign investors that Kenya would not default on its international debt obligations.
