NAIROBI, Aug 5 – Kenya is negotiating approximately $450 million in emergency financing from the World Bank to help cushion its economy against the combined effects of the Iran war and anticipated El Niño-related weather shocks, according to people familiar with the discussions.
According to Bloomberg, the Kenyan government is finalising a Contingent Emergency Response Project (CERP), an emergency financing mechanism through which the Washington-based lender would channel the funds.
The financing is expected to become available by October, coinciding with forecasts that El Niño conditions could intensify across the region, although both the size of the package and the timeline remain subject to change.
The proposed funding comes as Kenya faces growing economic pressures from higher global oil prices triggered by the conflict in the Middle East. The country, which imports most of its fuel requirements, has been particularly exposed to rising energy costs that have increased transport, manufacturing and agricultural production expenses.
Higher fuel prices have also contributed to increased fertiliser costs and higher prices for food and other essential goods, adding to inflationary pressures and raising the cost of living.
At the same time, Kenya is preparing for possible weather-related disruptions after the World Meteorological Organisation (WMO) warned that a strong El Niño event is expected to strengthen between August and October, increasing the likelihood of above-normal rainfall and extreme weather across many regions.
If those forecasts materialise, Kenya could experience widespread flooding, damage to transport infrastructure, disruptions to agricultural production and increased economic losses in vulnerable communities.
The conflict in the Middle East has also disrupted global shipping routes, increasing freight costs and affecting international trade, while heightened geopolitical uncertainty has weighed on investor sentiment and foreign exchange earnings.
Unlike a traditional development loan, the proposed financing would be provided through the World Bank’s emergency response framework, allowing countries to rapidly redirect funding from existing projects to address urgent crises.
The request follows recent warnings from the World Bank that oil-importing African economies, including Kenya, remain among the most vulnerable to rising fuel and food prices resulting from geopolitical tensions.
The lender recently lowered Africa’s 2026 economic growth forecast to 4.1% while raising its regional inflation outlook to 4.8%, citing the economic impact of heightened global geopolitical risks.
Kenya is already contending with elevated public debt, inflationary pressures and rising living costs, making additional external financing increasingly important as the government seeks to protect households, businesses and key sectors of the economy from multiple external shocks.
If approved, the emergency financing would provide additional fiscal space for the government to respond to the economic consequences of both global conflict and potential extreme weather while supporting broader macroeconomic stability.
