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Kenya leads regional peers in infrastructure projects

FINANCIAL STANDARD
By Frankline Sunday | March 10th 2015
Thika Road that has eased transport between the city and suburbs . The Government is relying on public private-partnerships to build key road infrastructure.

Kenya: Kenya is on an infrastructure binge that will see her develop one of the most advanced infrastructure networks in sub-Saharan Africa in the next decade.

Data from a construction survey by consulting firm Deloitte, shows that East Africa accounted for 29 per cent of the continent’s 2013 infrastructure spend, valued at Sh6 trillion.

The majority of this construction spend is spread across several projects in rail, port, road, energy and oil and gas are in Kenya. The World Bank’s Kenya Economic Update report indicates that sustained infrastructure investment and falling international oil prices will see the economy grow by seven per cent in 2017.

In the 2015/2016 financial year, Kenya’s infrastructure has received a boost from the Sh25 billion special intervention kitty. The money will be used to revamp the country’s roads, rail and airport infrastructure in the 2015/16, 2016/17 financial year. The Government has also allocated Sh125.5 billion towards paying for the maintenance of the road network and building new roads. “Last year, we were talking about $225 billion (Sh22.5 trillion) being spent on mega infrastructure projects, but this year, the number is edging towards $300 billion (Sh27 trillion),” said Deloitte Senior Partner for Infrastructure and Capital Projects Dr Mark Smith.

The Government expects to construct and rehabilitate 5,500 km of roads through a public-private partnership (PPP) and another 20kms of new roads in each constituency by 2017.

Some of Kenya’s mega projects include the multi-billion shilling standard gauge railway from Mombasa to Nairobi, by-passes in major cities and towns and power generation projects. A further Sh125 billion allocation is expected to fund the refurbishing of the Jomo Kenyatta International Airport and fund the implementation of the single window clearance system.

The second Nyali Bridge is the first, big public-private partnership project that will be executed in Kenya under this agreement.

High Stakes

Last month, Deloitte was named the lead advisor for the project. Smith, who is responsible for managing the multi-billion shilling project says the stakes in the new infrastructure funding model are high with more opportunities available. “This is a critical assignment for the national government and the county government,” he explained. “There are a lot of things that are talked about and planned that could be in the planning phase for years and we want to help deliver this in a specific time frame.” Smith and his team are charged with the responsibility of assessing the technical and financial logistics of setting up the bridge and bringing together a consortium that will put up one of Kenya’s largest bridges.

“We need to put together a tight, technical and financial package that can then be taken to domestic and external investors to raise money to build this bridge,” he said. “In addition to investors who will provide financing, we also need a consortium that will be charged with designing and building the bridge and one that is charged with operating the same.”

Smith says international and domestic investors have already shown interest in investing in key infrastructure projects in the region.

“International investors are seeing what has been happening over the last three to four years, where there has been a tremendous economic growth in Kenya and East Africa, and they are seeing this trend continue,” he said.

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