Supporters say the conditions strengthen public finances and governance, while critics argue they can limit national policy autonomy…reports Africa Daily News Desk
Kenya’s latest $750m World Bank financing package has reignited debate over the conditions attached to concessional lending, raising questions about the balance between strengthening public institutions and preserving national control over economic policy.
For decades, multilateral lenders such as the World Bank and the International Monetary Fund have provided developing countries with financing at lower interest rates than commercial borrowing, particularly through concessional lending programmes. In return, governments have often been required to commit to reforms designed to strengthen public financial management, improve tax collection, increase transparency and promote economic stability.
Supporters of these conditions argue they help ensure public funds are used effectively, reduce corruption risks and protect countries from unsustainable debt. Critics, however, contend that they allow international lenders to exert significant influence over domestic policy, particularly in countries with limited access to affordable sources of finance.
Across Africa, governments seeking concessional funding have increasingly been asked to implement reforms extending beyond the projects being financed. These have included changes to governance, procurement systems, climate policy, social protection programmes and public financial management.
Kenya’s latest financing package combines lending from the World Bank’s International Bank for Reconstruction and Development and concessional financing through the International Development Association. It forms the second phase of the country’s three-part Fiscal Sustainability and Resilient Growth Development Policy Operation.
According to the World Bank, the funding is intended to support governance reforms, strengthen public financial management, expand social protection and improve livelihoods for refugees and host communities. The programme has also revived discussion about how much negotiating power governments retain when they rely on multilateral financing.
President William Ruto has criticised what he described as the broad range of requirements some African countries face when seeking international financing.
Speaking at a State House dinner for members of the African Trade and Investment Development Insurance on June 2, Ruto said some lenders attach policy demands unrelated to the financing itself.
“It is difficult to go borrowing money from people. They subject you to all manner of things. You know. Do this, go and pass this law, how about you go and pass the sexuality laws, go and do this, and do this. Things that have nothing to do with the money you are looking for,” Ruto said.
Churchill Ogutu, head of research at Capital A Investment Bank, said countries facing limited fiscal space often have less leverage when negotiating financing arrangements.
“It takes two to tango. When fiscal space is constrained, governments have less room to negotiate. As financing options improve, the conditions become less stringent,” Ogutu said.
Ogutu said Kenya has sought to diversify its funding sources, including through international bond markets, as part of efforts to reduce dependence on multilateral financing with policy conditions attached.
Across Africa, reforms linked to international financing have frequently included measures such as tax increases, subsidy reductions and tighter controls on government spending.
International lenders argue these reforms are necessary to restore fiscal stability, strengthen public finances and reduce debt risks. Critics say they can increase the cost of living and place additional pressure on households already facing economic hardship.
The political sensitivity of such measures was highlighted by Kenya’s 2024 anti-Finance Bill protests, which later developed into broader anti-government demonstrations. Rights groups and other observers reported more than 60 deaths during the unrest.
The protests followed tax proposals introduced as Kenya sought to meet fiscal targets under its IMF-supported programme, approved in 2021. The programme included measures aimed at strengthening revenue collection, easing fiscal pressures and implementing wider economic reforms.
