Economic turbulence blurs Kenya’s vision

By 2030, it will become impossible to refer to any region of our country as remote”. With these 16 words, the drafters of Vision 2030 — the Government-driven development strategy — spelt out the extent of projects meant to lift Kenya’s tottering infrastructure ranging from roads, railways, ports, airports, water and sanitation facilities, and telecommunications.

While Government officials reckon that the foundation has been laid for most of the projects, analysts are divided over the pace of implementation while agreeing that poor infrastructure is the biggest setback to Kenya’s business environment. Economists argue that the country’s economic wellbeing and the success of the blueprint is delicately hinged on pushing through key infrastructure projects on a budgetary platform centred on proportionately higher development spending than recurrent expenditure.

“To further rejuvenate the economy, we will step up implementation of flagship projects outlined in Vision 2030,” said President Kibaki a fortnight ago. “Focus will be on the productive sectors that need revamped infrastructure to thrive. In particular, I am confident that we are now ready to begin works on Kenya’s second transport corridor linking us to Southern Sudan and Ethiopia and a new port at Lamu.”

As the country enters the dying years of the first phase of the Vision 2030 programme — a five-year medium term plan that runs to 2012 — economists are raising the red flag over the slow speed of implementing the projects.

“So far, the implementation of infrastructure projects is dismal, ” said Dr Tabitha Kiriti-Ng’ang’a, a senior lecturer at the University of Nairobi’s school of economics. “While the economy is under massive pressure due to the global financial crisis, we cannot hide under the same and delay infrastructure projects,” said Dr Kiriti-Ng’ang’a.

Plans are under way by the national railway operator — Kenya Railways Corporation (KR) — to build high speed rail lines across the country to replace the 100-year-old rail line that was laid by the colonial government which has been a lifeline for the manufacturing sector in Kenya and Uganda but has proved inefficient in handling increased cargo flow from Mombasa port.

“While we are seeing so much of road construction, there is still a lag in expanding railways, ports and airports which are crucial in trade and business,” said Dr John Akoten, an economist at the Institute of Policy Analysis and Research (IPAR), a policy think-tank.

Busy highways

“Kenya’s competitiveness in the region will be judged by the level of infrastructure put in place,” said Dr Akoten. Currently, the building of three major by-passes, which will help to ease traffic on the busy highways in Nairobi is ongoing, although they are delayed due to lack of funds.

The Nairobi-Thika road expansion, which is expected to cost an upward of Sh30 billion is also underway, with about three per cent of the work done, according to a recent Treasury update.

In the ICT sector, the Government was to invest in fibre optic networks, meant to lower the cost of doing business across sectors by providing an alternative cheap connectivity to the rest of the World. While these projects — East African Marine System (TEAMs) and the National Fibre Optic Backbone Infrastructure (NOFBI) — are already in the process of being rolled out, experts say internet costs still remain comparatively high. Mr Peter Wachira, a senior investment manager with AIG Investments, says while nothing much has been done in kick-starting work on key projects like railways, the development spending in the current year could help lift the status of infrastructure.

“Under the current economic conditions, the stimulus package, if well implemented could help improve the business environment, ” said Mr Wachira.

In June, Finance minister Uhuru Kenyatta set aside Sh50 billion from his Sh866 billion budget to finance constituency development projects.

The money is used to build schools, fresh produce markets, jua-kali sheds, health centres, fish ponds, purchase of mobile computer laboratories, and maintenance of roads.

Me Kenyatta also allocated Sh22 billion, or an equivalent of Sh105 million per constituency, as “conditional economic stimulus or resilience package toward financing infrastructure development.”The development strategy is to be executed through 20 flagship projects including building of three resort cities, the supply of cheap fertiliser to farmers, and the creation of a Dubai-style free trade port and industrial parks for small businesses.

Economic pillars

The six sectors chosen as the blueprint’s “economic pillars” are tourism, agriculture, manufacturing, trade, information technology and financial services, all which will require a strong infrastructure springboard.

“There is so much money out there which the Government can strategically tap through infrastructure bonds even as it grapples with weakening revenues in the current economic environment,” said Dr Kiriti-Ng’ang’a. Experts said the construction sector, buoyed by a host of big infrastructure projects, is set to emerge as an engine for growth in Kenya’s under-performing economy on the back of the country’s resilient real estate market and the released Sh22 billion stimulus package. Construction of the projects is expected to further put money into pockets of the most vulnerable groups through employment, a move that is expected to prop up the private sector by raising the overall consumers purchasing power.

Source: www.businessdailyafrica.com

<back