Africa Growing Together Fund provides EUR 43.2 million loan for Phase 1 of Thwake Multi-purpose Water Development Program (TMWDP) (Linked to Umbrella Record ID#36104)

Project narrative

On May 22, 2014, the African Development Bank (AfDB) and the People's Bank of China (PBOC) signed an agreement for the Africa Growing Together Fund (AGTF) (see Umbrella Record ID#36104). The purpose of this $2 billion loan facility was to finance large development projects in Africa between 2014 and 2024. The AGTF is sponsored by the PBOC and the administered by AfDB. Then, on June 19, 2019, AGTF signed an EUR 43,192,813 loan agreement [ID#5050200000501] with the Government of Kenya for the Phase 1 of the Thwake Multi-purpose Water Development Program (TMWDP). On the same day, the African Development Bank (AfDB) issued an EUR 235.8 million ($269.4 million) loan to the Government of Kenya for the same project. The AfDB had previously issued an EUR 76 million loan in 2013 for the same project. The AGTF loan carries a 25 year maturity (final maturity date: August 15, 2044) and an 8 year grace period (first repayment date: August 15, 2027). The other borrowing terms of AGTF loans are unknown. However, it is known that the borrower is expected to use the loan proceeds to finance a commercial contract between the Government of Kenya and China Gezhouba Group Company Limited, which was signed on November 15, 2017 (after the implementation of an international competitive bidding process). According to the Government of Kenya’s External Public Debt Register, one or more loan disbursements worth EUR 8,307,824.73 took place in Fiscal Year 2020-2021 and the loan’s amount outstanding was EUR 2,982,333.34 as of June 30, 2020 and EUR 11,290,158.07 as of June 30, 2021. As of August 2021, the loan had achieved a 40.06% disbursement rate. The purpose of the project is to construct the Thwake multi-purpose dam on the Thwake River in Makueni Country. The project consists of four phases, the first – expected to be complete by December 2022 – being the dam’s construction. The other phases will add additional features to the project: phase 2 – water distribution, treatment and desalination facilities phase 3 – hydroelectric power generation phase 4 – irrigation of the surrounding area Makueni County is semi-arid and the project is expected to support the region’s water and energy needs as well as the nearby city of Konza. The program’s target beneficiaries are the 674,700 people in the rural areas of Kitui and Makueni (with poverty rates of 62.5% and 63.8%, respectively) and the 640,000 people to occupy the land reserved for the new urban ICT city of Konza. Other beneficiaries comprise the institutions managing the water resources in Athi River Basin and the economy of Kenya. China Gezhouba Group Company Limited is the EPC contractor responsible for implementation. The project site was handed over to China Gezhouba Group Company Limited on March 27, 2018, which also marked the project commencement date. The project’s originally expected completion date was November 5, 2022. On April 2, 2019, a Kenyan parliamentary committee conducted an on-site project inspection and it found that '136 [project-affected persons] had not been compensated.' It also found that 'the progress of works at the dam construction site was not up to speed. It was slow and seemingly uncoordinated and mainly was mobilization activities that were going on at the time.' As of April 2, 2019, the project had achieved a 7.2% completion rate. By June 2020, the construction of the dam was 53% complete. As of June 30, 2023, the project had achieved an 86% completion rate. China Gezhouba Group Company Limited was eventually granted an extension to complete construction by February 5, 2024 with a defect liability period of one year.