Kenya now playing catch-up to Ethiopia on mega projects

Ethiopia is tipped to stretch its lead on Kenya in economic growth, spurred by increased investment in development projects.

According to The Africa Construction Trends report 2017 released by audit firm Deloitte yesterday, for every Sh100 that Ethiopia budgeted for, Sh40 went to projects in key sectors of the economy compared to Kenya’s Sh20.

This means that Ethiopia - which in 2016 overtook Kenya to become the largest economy in Eastern Africa - is in good stead to stretch its lead over Kenya. According to the report, although Kenya had the largest number of projects between 2016 and 2017, the total value of projects in Ethiopia was almost twice those in Kenya.

Doing well

Most of the projects were in the transport sector (53), followed by mining (23), real estate (14), and water (six).

Ethiopia, noted Deloitte, was currently building the Grand Ethiopian Renaissance Dam at a cost of Sh4.1 billion as well as the Kyosha Hydroelectric Dam at Sh2.8 billion.

According to the International Monetary Fund, Ethiopia’s economy has overtaken Kenya’s with the former’s gross domestic product (GDP) - or the total value of goods and services produced annually - hitting Sh7.4 trillion in 2016 compared to Kenya’s Sh7 trillion.

“They (Ethiopia) are doing really good. They have come from nowhere to somewhere in a relatively short space of time,” said Deloitte Africa Infrastructure and Capital Projects Leader Jean-Pierre Labuschagne.

Project overruns were mainly due to weak regulatory frameworks.