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Kenya’s Obsession with Infrastructure. Is it Worthwhile?

  Aug 4, 2017
 

While infrastructure is considered central to the development of the country’s economy, the cost of doing so is adequately high. Kenya’s infrastructural plans have been supported by increase in government spending, foreign donations and vital participation by the private sector.  Concerns over its impact, necessity to do so, among other issues continue to spur great discussions.

Irungu Nyakera, Principal Secretary of the State Department for Planning and Statistics, puts this to perspective during Strathmore Business School’s Center for Business Journalism, monthly Policy Dialogue. Mr. Nyakera previously served in the capacity of Principal Secretary, State Department of Transport and infrastructure where he oversaw formulation and oversight of the implementation of national policies on transport in Kenya.

Infrastructure is part of the bigger picture: Vision 2030

Kenya’s vision 2030 has 3 pillars; the economic, political and social, with infrastructure being an enabler to these pillars. Poor infrastructure is an obstacle to development, as witnessed in many African states that lack accessibility to social amenities. In realizing the economic pillar of the vision, infrastructure has been crucial in advancing the country’s accessibility.  “Africa has a 90 Billion USD deficit in infrastructure. As a country, we have looked at how we can use infrastructure to realize the vision 2030 and that has been through opening corridors that open up the country. The main corridor is the Northern Corridor that spans from the North of Mombasa, all the way to Eldoret, to Busia the border of Uganda. Other corridors include; the Lappset corridor, which opens up the northern part of the country economically but also connects the country to the region, and the southern corridor, that has opened up the lower side of the northern corridor. Financing infrastructure is expensive, but it has to be done,”

Connectivity and Economic Growth

With a rapid population growth, the cost of housing around the city has become very high and in cheaper environs, the living standards are very poor. “Currently, Nairobi has a sleeping capacity of 3 Million, but a day capacity of 7 million. This demonstrates the importance of transit channels that facilitate ease of movement, to and from the city. As we think of mass transport to decongest the city and ease its movement, we have to envision a functional rail system.”

Despite the challenges Kenya faces in improving its infrastructure, the country is home to many international organisations headquarters, “Most of the international institutions have chosen Kenya as the headquarters of their organisations. This is a clear indication that Kenya continues to be a conducive access point between the international community and other African states. Nairobi is one of the cities in which one can access more than 35 African states. This reality illustrates the importance of enhancing our air travel as a key driver to economic growth and international connectivity. We are planning on having one air strip per county.”

Africa’s share of global manufacturing is drastically disproportionate to its population. While 15% of the world’s population lives in Africa, only about one percent of global manufacturing takes place in Africa. This is largely due to poor transport, communications and energy infrastructures, says UNCTAD’s latest Economic Development in Africa Report. These adverse effects to the manufacturing industry continue to be experienced across many African states. “In Kenya, the cost of production of raw materials is taken up by 35%, largely based on transportation expenditures. Unlike in many developing countries, the cost of transportation only accounts for 4% of the total production cost. We have to address connectivity and road access into the corridors. Thanks to devolution we are seeing road connectivity increasing.”

Although there have been many discussions on the effects of coal as a source of energy, the country is yet to consider alternative sources of energy, says Nyakera. This is due to high cost of energy sources such as geo thermal, wind, and solar. “Today, we pay 14 cents per Kilowatt in wind, 8.5 cents for Geo Thermal and 12 cents in solar, whereas coal costs 5.5 cents per Kilowatt.”

Striking the balance between infrastructure goals and climatic strains is also a ranging concern, “We agree that Kenya is a signatory to Cop21 and hence holds matters on climatic degradation with serious concern. With this respect, we have ensured that we take care of the emissions as we make use of coal as a source of energy. The greatest climatic concerns as far as the use of coal is concerned, has been the disruption of the mangrove and sea life.”

“Our vision is to be an upper middle class in the next 13 years. We are on the right track in laying the necessary foundation to realize this vision,” concluded Nyakera.

About the Policy Breakfasts

The policy breakfast for business journalists are held monthly and led by experts and policy makers on matters of interest in the business and finance landscape. It is the intention of these dialogues to develop partnerships with business journalists that addresses the possible challenges of access to information when reporting.

The purpose of the policy dialogues is to gain knowledge, and enhance critical analysis that reposition Kenya into being a worthwhile economic investment destination. These policy dialogues are in collaboration with Business Advocacy Fund (BAF) that supports private-public dialogues through business associations interested in advocating improvements in the business environment in Kenya with the expectation that, if successful, reformed policies will lead to more investment and ultimately, more jobs.



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