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The World Bank has approved a $330 million loan for Kenya to expand its national grid and support its emerging geothermal power generation.

East Africa's largest economy relies on hydropower to generate about 65 per cent of its electricity but it is prone to power shortages and cuts, which were exacerbated last year when a drought dangerously lowered the nation's dam water levels.

"The supply deficit and costly short-term interventions constrain economic growth and reduce the regional competitiveness of Kenya's private sector," the World Bank said in a statement.

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