Kenya has received a Sh1.5 billion loan from India. The money from India’s Export-Import Bank (Exim Bank) will be used to support local small and medium enterprises to purchase equipment to boost productivity.
This includes the purchase of machinery, fertilisers and other farm inputs besides paying for consultancy services. The loan agreement comes with plenty of strings attached with the lenders clearly stating that Kenya must use at least 75 per cent of the funds to procure goods and services from Indian companies.
“The goods and services to be purchased under this agreement are those which are eligible for export under the Foreign Trade Policy of the Government of India and whose purchase may be agreed to be financed by the Exim Bank under this agreement,” a circular signed by Exim Bank of India Chief General Manager Deepak Kumar reads in part.
“Out of the total credit by Exim Bank under this agreement, goods and services of the value of at least 75 per cent of the contract price shall be supplied by the seller from India and the remaining 25 per cent of goods and services may be procured by the seller for the purpose of the eligible contract from outside India.”
In February this year, it came to light that the National Treasury was borrowing Sh134 billion ($1.3 billion) from international lenders to seal budget holes. Treasury says that a total of Sh155 billion ($1.5 billion) will be secured from external loans this year amid concerns of piling foreign debt.
Kenya’s total debt increased by almost a third (28.7 per cent) last year from Sh2.8 trillion in 2015 to Sh3.6 trillion in June last year, according to Central Bank data.
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