KENYA AND THE WORLD BANK GROUP:TAKING STOCK 2015 IN THIS REPORT: Investments in Kenya 2 Better portfolio implementation 2 Policy advice and analytical services 3 Early results of the country strategy 3 Photo by David Waldorf Is it just Grace? The World Bank's $4.3 billion of investments in Kenya includes funding Grace's work in helping disabled children with HIV/AIDS to become self-reliant. But is her story enough to tell whether the overall portfolio of investments is paying off? Forging a brighter future focus areas in the World Bank Group (WBG)'s Strateg for Kenya. The WBG is investing $1 billion or more of new For generations, the pastorialists of Samburu, a county resources each year to support Kenya's ambitious agenda 400 kilometers north of Nairobi, have roamed from place of promoting sustained, inclusive, and accountable growth; to place in search of water and pasture for their animals. lifting millions of families out of poverty and becoming a In such nomadic communities, it is common for children modern economy. Four out of ten Kenyans are poor and born with disabilities and HIV/AIDS who cannot help herd the richest 10% of the population receive 40% of the animals in distant fields to be abandoned by their families. nation's income. To fight poverty, the WBG support aims "I met a blind boy who was left behind. I had to take him in," to promote growth, protect the vulnerable, and deliver a says Grace Seneiya, who opened a school in Samburu for devolution dividend while garnering good governance, disabled children living with HIV/AIDS. which is the connecting platform that will influence the success of broad efforts in all areas. (Figure 1) Since then, Grace has helped more than one boy. With the support from the World Bank, her school center has trained OUTCOMES WBG WANTS TO HELP KENYA ACHIEVE health workers to ensure that the 150 disabled children living with HIV/AIDS have access to nutrition, medicine, Growth to Human Resource Delivering a and home care. In fact, this is one part of a broader project Eradicate Development for Devolution - the Total War against HIV and AIDS (TOWA) - that has counseled over 5 million people for HIV, distributed over 2 million insecticide-treated bed nets and 300 million condoms nationwide, and funded grants to more than 10,000 community-based organizations to raise awareness of HIV/AIDS. As a result, between 2007 and 2012, the HIV prevalence rate across Kenya was reduced from 7.2% to 5.6% and new infections declined by 40%. Fighting poverty Grace is doing her part in protecting vulnerable groups CONNECTING PLATFORM: and helping them reach their potential, one of the key Garnerng Good Goverrnance KENYA AND THE WORLD BANK GROUP:TAKING STOCK 2015 BIG INVESTMENTS IN INFRASTRUCTURE Better implementation Human How can Kenya maintain this position and indeed accelerate development opmendisbursements and improve overall implementation? There Infrastructure are several challenges to be addressed. Managing $4.3 cimate k PROCUREMNT BILLION Getting up to speed Is one stry tuough One way is through better contract management and are Eprompt procurement practices in projects. In some cases, lengthy response times in getting clearances for high-value contracts with complex technical aspects - sometimes taking up to 191 days for Bank-financed urban infrastructure Is one story enough? project contracts to be signed - have created a logjam in the project cycle. In other cases, when it has worked well, Grace's story shows how one person's efforts can have a there have been faster clearances, better procurement transformative impact in the lives of vulnerable children. planning, higher quality bidding documents, stronger But what is the bigger picture of how WBG investments contract management, and proper staffing to generate are paying off In fiscal year 2015 alone, some $1.3 billion better results. In transport, for instance, despite many of new IDA resources - the Bank's finance at concessional procurement challenges, the Government drew on Bank rates - were committed: the largest in Kenya's history. support and rebuilt core infrastructure as an emergency The value of the overall portfolio of 27 projects of about response to the tragic fire at Jomo Kenyatta International $4.3 billion as of June 2015 is almost double what it was Airport in the summer of 2013. Bank support since 2010 also just five years ago. As figure 2 shows, investments are helped repair 380 km of critical sections of the Northern spread across many key sectors. Those range from hard Corridor road between Mombasa and Nairobi. That has infrastructure (roads and energy) to human development reduced transit time between the two cities by a third, (health and community development) to managing climate from 11 to 8 hours, and lowered the cost of transport to risk (agriculture and coastal management) to strengthening drive business growth. institutions delivering public services (judicial reform). HOW ARE KENYAS PROJECTS DOING? The World Bank and government teams carefully monitor 2014. But ee e7projectsfixmonths- as summarized in two key indicators: implementation progress (how well actions are being taken and money is being spent) and meeting sfct o development objectives (how likely it is that project results will be achieved). As figure 3 shows, as of June 2015,18 out of 27 projects - covering $2,850 million in net commitments and in a range of sectors, including energy, water, transport and agriculture - are performing satisfactorily overall. That is about the ratio that is observed in Bank portfolios across $150 MILLION theglobe -andis aslight improvement on the figurefrom 2014. But there are 7 projects - for a bit more than $950 IMPLEMENTATION PROGRESS million in net commitments in health, judicial reform and Moderately unsathsifacsory Moderae satsfacory urban infrastructure - that aren't making satisfactory or worse orbetter progress and on current observation, may not achieve their 2 i-c s ,,, S100e Oce sinre vcr cnrove-_- rf.i -nar cc , nt be- t,cun:.8 , e objectives. These require some "intensive care" of the kind that will be discussed in the following section. USING MONEY EFFECTIVELY AND ON TIME Implementation is also about using money effectively case and on time. In Bank parlance, this is often measured by the "disbursement ratio," or the amount disbursed 20s as a percentage of the total undisbursed balance at the 1 1 5r beginning of a fiscal year (cFY, which runs from July 1 to June si30thereahavereeenshasterfclearances,eartter5,rocurement disbursement ratio is 22% - meeting the global target and the highest ever seen in Kenya's history. in fact, some $450 million dollars was spent through the year - the highest ever volume in disbursements, almost double what it was 0 11 012 2013. n supo201 sInce 2015 also 5 years ago. KENYA AND THE WORLD BANK GROUP:TAKING STOCK 2015 COUNTERPART FUNDS: Making it countKNWEGADSTMOY Makin it ountDelivering results is not always about money the Bank's policy advice and Another challenge in implementation is ensuring analytical services an also help. A key focus area of the Bank's strategy is counterpart funds" (the Goverment'suin on devolution. The Bank provided a "Devolution without Disruption" report in counerpat fnds"(th Govrnmnt'sown 2012 and also helped with a major Nairobi conference on subnational fiscal resources) are available on time alongside Bank management in 2D14. Most recently, a Bank-financed Public Expenditure financing. Counterpart funds have historically been Review helped frame the policy debate on government spending on devolution incorporated into development partner funding and infrastructure. Other policy areas include improving the Integrated Financial models to ensure that national governments sustain Management Information System (an automated system that enhances andefficiency in planning, budgeting, procurement, expenditure management, and and ncrasether rsoures o fnd rogams reporting), making greater use of properly controlled electronic funds transfer, in key sectors. When this hasn't happened there and supporting the capacity of the country's supreme audit institution (KENAO) have been delays - such as in a transport project to deepen its work, including in performance audits. Getting these financial which did not have the resources to pay contractors systems working well is key in ensuring that scarce public resources are spent working on roads. In other cases such as in social smartly and are accounted for. This becomes more important than ever as protection, things have been smoother and the significant fiscal responsibilities get transferred to newly devolved counties. timely combination of Government and Bank finance has scaled up significantly in FY15, to ensure over development. The new power is already reaching millions of 530,000 poor households are enrolled for welfare support. homes and the price of electricity has fallen by 30% over the However, as the program continues to grow, with 230,000 last year. Kenya leads the way in having more than half of all more poor households expected to be enrolled by 2017, its energy from climate-friendly sources. budget for counterpart funds must be made available to provide reliable transfers for the vulnerable. SAFEmGUARDS: COO RD INATI10N: Do no harm It takes two to cha-cha One more challenge faced in Kenya - as in projects around the world - is in implementing safeguard standards diligently. Ensuring that project implementation units are well The Bank's safeguard standards are to help countries address coordinated is also key. This ranges from ensuring that environmental and social issues in development projects, and funds flow smoothly from the National Treasury to the to provide an avenue for grievances to be aired. In the Bank- line ministries and from the line ministries to the project financed Natural Resource Management Project, for example, accounts, to making sure there is sequencing of key activities complaints were made that the Bank had supported evictions such as land acquisition and resettlement for the relocation from the Embobut forest. The Inspection Panel - the Bank's of utilities (power, sewer and water lines). For example, in independent fact-finding body - found that the Bank was not the energy sector, there were delays in the acquisition of land responsible for that. Yet the Bank pledged to do whatever for substations and rights of way for transmission lines out of possible to address concerns of communities and build the Olkaria field, a geothermally active region in the Great Rift trust between them and key public agencies. A colloquium Valley in Kenya that the government is harnessing to generate in March 2015 brought together more than 300 participants clean electrical power. Proactive Government efforts have and provided a unique opportunity for the forest-dependent now solved these problems. Indeed, with Bank support, there communities to engage constructively with the government is now 400 MW of geothermal energy production on stream and other stakeholders on contentious challenges in the in Olkaria - making it among the world's largest such new management and sharing of forest resources. Early results and FROM PROJECTS TO RESULTS, STEP BY STEP a platform of progress thSneg So the portfolio of Bank-supported projects moves forward and tackling some hurdles. But ValleyS ihow does it contribute to the country strategy as a cleanwhole delivering results? Is it nudging Kenya closer is nowrto its aspiration of being a globally competitive homesT and prosperous nation by 2030? Examp e: Increased generation Frankly, just one year in e th country capacity of geothermaliith-sinceouhs MILESTONES power plants ostrategy (2014-2018) was approved, that question cannot be answered with a simple yes or no. But Constrtcton of some light can be shed in following a discipline ThesBanksssaof monitoring the "results chain." (Figure 5) Take the energy sector as an example, where the first step is on track - namely the project investments, including in geothermal energy production KENYAAND THE WORLD BANK GROUP:TAKING STOCK 2015 HOW IS KENYA DOING WITH MILESTONES? i Data is also missing for 50% of the strategy's outcomes - the "destination" En esr nSocion Fitzk Health of the strategy by 2018. (Figure 7) That E Pmust be addressed in the coming Cn period, including redoubling efforts in developing integrated strategic urban development plans, enhancing agricultural productivity, and managing climate risk to ensure Kenya . is on track to deliver results. Such a pattern with weaknesses in the data is not uncommon in complex country c w programs, but these tend to be resolved 0 * as the portfolio matures and progress is made with project activities. Managing Service County Infrastructure Urban Agriculture Climate Risk Delivery Governance So this scorecard for the first Growth to Eradicate Poverty Human Resource Development Delivering a Devolution Dividend twelve months highlights some good for Shared Prosperity progress, spotlights weaknesses, and conveys movement which is T s , f es1 t, " h t t of r broadly on track. The bumps on the to I tatr e i t. c : Ce t, I Jie bail th coer iti o E intende reuts: abb ge, blow 2 red, and yo f rythi i,netwen road perhaps echo some that Grace dealt with - including how to turn resources into effective services to ordinary people. That is HOW IS KENYA DOING WITH OUTCOMES? an especially exciting challenge at a time when more and more responsibilities and resources are being devolved to Improvement froment Kenya's new 47 counties. This reform has teething problems, from baseline Incombut commands nationwide attention. As Grace explains, Inom lete/l' no"Devolution is a blessing for this county. People are getting Abetter services in the hospitals because the people providing LOOKthese services are from here. So services are being brought 10 Rrs closer to people:' OUTCOMES "-1 Regression from baseline So it's fair to maintain a scrutiny of the collective development efforts in Kenya, including those that have World Bank support. Many will hope that a year from now, there will be renewed evidence and more stories of Kenyans on their way to fulfilling their aspirations of a better life for and modernizing power lines (the principal inputs), their families in a truly modern economy. E are performing satisfactorily. Next, this should lead to milestones - specifically, commencing construction of 330 km of transmission lines and substations to connect Kenya's grid with Ethiopia. Data shows progress. And such milestones should unlock the output of 4000 MW of generation capacity being installed and systems losses reduced to 16% by 2018. As of mid-2015, generation capacity has risen to 400 MW and the loss ratio is estimated at around 18%. Meeting these milestones and outputs will help Kenya achieve a more reliable and efficient energy supply for households (outcome). What does the broader picture look like beyond this example of energy? Across the strategy, there are milestones that correspond to 10 outcomes. Kenya has made good progress in 70% of them so far. (Figure 6) Examples include securing public-private partnerships for ambulatory services, a signed agreement for pooled procurement of essential medicine, among others. But that still leaves several Photo by Original Images. milestones either not making progress or data simply not This report was prepared by Thomas O'Brien and Hannah Kim in July 2015. available.