68958

          The Republic of Kenya: Country Partnership Strategy Progress Report,
                  Water and Sanitation Additional Financing Project,
                                         and
                  Nairobi Metropolitan Services Improvement Project

                              Meeting of the Executive Directors

                                         May 10, 2012

                                     Chair’s Summing Up

       Executive Directors discussed the joint Bank-IFC Country Partnership Strategy (CPS)
Progress Report for Kenya (IDA/R2012-0093[IFC/R2012-0108; MIGA/R2012-0017).

       Directors broadly supported the Progress Report, and agreed that the Strategy’s focus on
achieving growth with equity and environmental sustainability remains appropriate. Directors
noted the Government’s success in managing recent external shocks and encouraged the
Government to continue to implement policies and investments that would improve agricultural
productivity, food security, adaptation to climate change, and sustainable development, helping
Kenya to achieve its vision to become a middle-income country by 2030.

        Considering governance as the central challenge for Kenya’s development, Directors
welcomed the cross-cutting efforts in the CPS to improve governance, and encouraged the
Government to accelerate judicial reforms and other measures to enhance transparency and
accountability. While acknowledging some progress made in fighting corruption, the importance
of taking further decisive actions in this area was highlighted.

        In observing the critical risks and opportunities facing Kenya over the coming years, they
encouraged the Government to ensure that decentralization and implementation of the new
constitution, including its provisions on gender, remain on course as the country prepares for
elections in early 2013. Directors especially stressed the need to build capacity and provide
adequate resources in the counties, particularly in the arid and semi-arid lands, to help ensure
that decentralization enhances rather than undermines service delivery to the poor.

        Directors noted that successful implementation of the CPS should strengthen Kenya’s
resilience to shocks and enhance growth and competitiveness. They largely agreed with the level
and composition of planned Bank Group assistance, particularly in the areas of energy
generation, water storage and production, and urban development.          More broadly, they
encouraged the Bank to utilize the new Program for Results instrument and emphasized the
importance of integrating financing with knowledge, including South-South exchange. They
also urged caution with regard to development policy lending.

       Directors encouraged IDA, IFC and MIGA to continue working closely together to
improve the investment climate, expand access to credit, and exploit opportunities for public-
private partnerships. They also acknowledged Bank Group collaboration with development
partners, including regional bodies. Finally, they welcomed the revision of the results
framework, and urged Bank Group staff to remain focused on achieving the results indicated.
                                      Summaries of Discussions

                         Water and Sanitation Additional Financing Project

        With respect to the Water and Sanitation Project, the Executive Directors approved an
additional credit to the Republic of Kenya for the Water and Sanitation Services Improvement
Project, in the amount of US$300 million equivalent, on the payment terms and conditions set
out in the President’s Memorandum (IDA/R202-0100).

       Directors supported the objectives of the project, noting that bringing additional piped
water and sewerage services to urban areas is critical. They welcomed the inclusion of measures
designed to ensure that people have access to water during period of drought. Directors noted
the measures put in place to ensure that funds are used as intended and encouraged collaboration
with other development partners and the Government to ensure sustainability of progress.

                        Nairobi Metropolitan Services Improvement Project

       With respect to the Metropolitan Project, the Executive Directors approved the credit to
the Republic of Kenya for the Nairobi Metropolitan Services Improvement Project (NaMSIP), in
the amount of US$300 million equivalent, on the payment terms and conditions set out in the
President’s Memorandum (IDA/R2012-0099).

        Directors supported the objectives of the project, noting that improved services and
infrastructure are crucial to enhance competitiveness, address poverty and promote social
inclusion. Directors urged the Government to ensure that governance changes mandated by the
new constitution, particularly including devolution, be undertaken in ways that protect the ability
of the project’s implementing entities to implement this project without undue interruption.
While noting the safeguards and other measures put in place, the importance of ensuring that any
resettlement process is transparent and adequately compensated was highlighted. Finally,
Directors encouraged continued collaboration with other development partners to support the
Government’s urban program.





    This summary is not an approved record.