Sunday, October 19, 2008

World Bank Approves US$29.5 Million for Eritrea

WASHINGTON, June 26, 2008

The World Bank Board of Executive Directors has approved US$29.5 million financing for Eritrea’s energy and early childhood development programs.

The Board today approved US$17.5 million additional grant financing for Eritrea’s Power Distribution and Rural Electrification project, and US$12 million new grant funding for Integrated Early Childhood Development project.

The two projects were approved within the context of Eritrea’s Interim Strategy Note (ISN) that was endorsed by the Board on June 19, 2008. The ISN represents coordinated efforts of the World Bank Group’s arms—the International Development Association (IDA), the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA).

The additional financing for the Power Distribution and Rural Electrification project is part of broad-based support for economic growth through rehabilitation of both the electricity distribution network and generation plants. The Bank has been supporting the development of the power sector in Eritrea through a credit and grant of US$50 million approved in June 2004. The key components of this project include rehabilitation and expansion of electricity distribution system in Asmara, Eritrea’s capital, rural electrification in four areas of the country, and a program for power sector reform and the building of related institutional capacity to increase efficiency in electricity sector operations. 

The Early Childhood Development initiative will consolidate gains realized through a similar project that was approved in July 2000 and closed in March 2007. The new project will improve health, nutrition and access to pre-school education of Eritrean children aged 6 years and under in targeted project villages.

In discussing the ISN and the two grants, the World Bank Board of Directors noted the impact of the existing portfolio in improving service delivery and ongoing engagement with the authorities in support for broader economic and governance reforms. The ISN, the Board noted, will enable the Bank to build its knowledge base and continue to work with the Eritrean authorities to find avenues for analytical and advisory activities. It will also create avenues for IFC and MIGA to improve the business climate and to support prospects in the mining sector.