Kenya grapples with infrastructure deficit

By James Anyanzwa

Treasury has warned that the country’s growing infrastructure deficit has increased the cost of doing business and rendered the country uncompetitive.

Cabinet Secretary Henry Rotich said it would require a sustained expenditure of $4 billion (Sh340 billion) annually over the next 10 years to meet the country’s infrastructure needs as spelt out in Vision 2030.

This amount, he said, is equivalent to about 20 per cent of the country’s gross domestic product.

Rotich added that though the Government spends a sizeable amount of funds to meet its infrastructure needs, the African Infrastructure Country Diagnostic Report estimates that Kenya’s infrastructure funding gap is about $2.1 billion (Sh178.5 billion) per year.

In a speech read on his behalf by Treasury Economic Secretary Geoffrey Mwau, Rotich underscored the role of the private sector in lowering the infrastructure deficit to deliver high quality service.

He said the private sector could engage with the Government through a public-private partnership (PPP), where the private party is contracted on a long-term basis to deliver public services at predetermined service levels.

He added that infrastructure is the top-most constraint to growth and doing business in Kenya, with transport as the main bottleneck affecting most businesses.

“Lack of adequate infrastructure results in huge costs to society, from lower productivity to reduced competitiveness and ultimately loss of business opportunities,” said Rotich.

He singled out the port of Mombasa with its issues of terminal capacity and the need to enhance rail and road interfaces to improve efficiency.

“Electricity is another major constraint, and the power sector needs to double its current capacity over the next decade,” he said.

The remarks were made at the official opening of a two-day conference on Government support mechanisms for PPPs in Nairobi yesterday.

“This support could be provided through the Project Facilitation Fund, established under the PPP Act,” Rotich noted, adding that the World Bank had extended $40 million (Sh3.4 billion) in credit to jumpstart the PPP agenda.

He said Government has identified fast-mover projects, mainly in the transport and energy sectors, that will be prepared using the funds.