Kenya has been making considerable headway over the past two years on a development agenda designed to strengthen the country’s position as a leading regional transport and logistics centre for the East Africa region. This is in spite of an infrastructure deficit which, according to the World Bank’s “Kenya Public Expenditure Review”, is expected to require annual spending of up to $4bn (around 20% of GDP) over the next decade. Kenya’s plans are supported by increases in government spending, foreign donations and vital participation by the private sector. In its 2015 report, the World Bank noted that the increased levels of spending on infrastructure meant Kenya was “moving in the right direction” in terms of realising its growth potential. Nevertheless, the bank has called for better efficiency and sustainability in the way investment drives are carried out, further underscoring the need for more private sector support.
By The Numbers
While improving Kenya’s infrastructure is recognised as being central to transforming the economy, the costs for adequately doing so are substantial. In its “Country Strategy Paper 2014-18”, the African Development Bank (AfDB) reported that between 2009 and 2014 spending on infrastructure in Kenya, including transport, energy, water and sanitation, and environment-related infrastructure, accounted for almost 27% of the national budget.
While overall government spending on development fell in fiscal year 2012/13 to 6.6% of GDP from 7.4% a year earlier according to the World Bank, it increased again in 2013/14 to 7.1%, demonstrating the government’s renewed focus on infrastructure investment. In 2014/15 the Department of Infrastructure saw expenditure rise to KSh120.5bn ($1.3bn), an increase of 37.6%, according to the “Economic Survey 2015” report from the Kenya National Bureau of Statistics (KNBS). During the same period, spending on roads, a key component of the government’s plans, is expected to reach KSh94.7bn ($1.04bn), up from KSh54.4bn ($598.4m), and road repair funds are set for an 11.2% increase, to reach a total of KSh25.8bn ($283.8m). The department’s budget for 2015/16 is KSh133.97bn ($1.47bn).
Transport activity is expanding in tandem with infrastructure spending. The KNBS reported 5% growth in the transport and storage sector in 2014, up from 1.22% the previous year. Meanwhile, the total amount of freight traffic by rail grew by 24.3%, from 1.2m tonnes in 2013 to 1.5m tonnes in 2014, and container traffic at the Port of Mombasa (PoM) rose from 894,000 twenty-foot equivalent units (TEUs) to 1.01m TEUs over the same period. This was partly due to the improvement of port facilities and a new single window system streamlining services.
Vision 2030
The government’s long-term development blueprint, Vision 2030, geared towards lifting Kenya to middle-income status over the next decade and helping millions of Kenyans out of poverty, is designed to be implemented through a series of five-year Medium Term Plans (MTPs), the second of which was launched in 2013. Infrastructure development is at the core of Vision 2030, with a host of large-scale transport projects in the rail, road and shipping segments set to boost GDP growth.
According to the AfDB, the first MTP, implemented between 2008 and 2012, achieved “mixed results” in economic terms, with annual GDP growth averaging a modest 3.7%. The MTP II, however, envisions a higher growth rate of 10% by fiscal year 2017/18. MTP II’s infrastructure spending targets amount to KSh245.63bn ($2.7bn) and will prioritise expanding and modernising all transport infrastructure including roads, railways, airports and ports, as well as greater support for agriculture, development of skills, governance reforms and public finance, and improvements to other key development metrics.
In 2014 the World Bank announced a Country Partnership Strategy (CPS) in support of Vision 2030. The goal of the CPS is to target $4bn in investments for job creation and infrastructure projects over the next five years. The strategy is timed to coincide with a political process of devolution in Kenya, which the World Bank hopes will ensure greater equity in how opportunities are distributed around the country and also improve service delivery at local levels.
Efficiency Hurdles
While the increased infrastructure spending bodes well for transport network expansion, in Kenya, as in many African markets, project execution and budget implementation has faced challenges in the past. The government’s plans will therefore need to be accompanied by appropriate maintenance funding and efficient service delivery.
The hurdles are many. According to the World Bank, “low execution and a declining operations and maintenance budget” have offset gains from rising spending on infrastructure. In its “Annual Bulletin of Infrastructure Statistics 2011”, the Common Market for Eastern and Southern Africa (COMESA) states, “Historically, there has been a tendency for road investment funds to depend on official development, meaning that donor assistance has leaned towards dramatic new road construction over road maintenance.” Moreover, the efficiency of infrastructure investments has declined: budget execution dropped from more than 70% in 2011/12 to 41% in 2013/14, and the budget allocation for “recurrent operations and maintenance” fell from 8.5% of GDP in 2010/11 to 6.1% in 2013/14. The World Bank also cites inadequate release of budget allocations by the Treasury, leading to extended gestation periods for projects, cost overruns and the amassing of debts.
Public-Private Partnerships
To help solve funding issues in the future, the government intends to generate KSh1.8trn ($19.8bn) for new infrastructure projects through public-private partnerships (PPPs). So far, 69 projects have been identified for both domestic and foreign investments within the transport, energy, education, water and sanitation, and health sectors. In 2015, notable projects open for investment include the development of Kisumu Port, which is currently at the feasibility stage, and the upgrading, capacity expansion, and subsequent operation and maintenance of the 485-km Mombasa-Nairobi highway, part of the main transport route serving East and Central Africa from PoM. With the full implementation of the MTP II requiring $4bn per year, but with the government able to provide only $1bn-2bn, PPPs will be a vital component of infrastructure projects. To encourage investors, the National Treasury, through the PPP Unit, has tried to strengthen the legal framework governing PPPs by passing the Public and Private Partnership Act of 2013.
In November 2014 the World Bank also announced plans to provide $1.2bn towards infrastructure development and to improve the overall competitiveness of EAC states. In addition, together with the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency, the World Bank has pledged more resources for the EAC through “market-driven private sector financing guarantees”. Support will go towards improving capacity and efficiency at PoM, alongside investments in other EAC member states over the next seven years. The investment in Kenya, as with World Bank funding elsewhere in the EAC, is designed to “facilitate easier movement of people, goods and capital”, ahead of the expected upsurge of resource extraction activity. IFC investments in the EAC, including Kenya, total over $1bn. Domestic recipients include Kenya Power and Lighting, Thika Power and Gulf Power of Kenya.
Physical infrastructure is also being supported in other ways. The AfDB’s CSP Pillar I, for example, which aims to provide more job opportunities by creating a more conducive environment for the private sector and investing in infrastructure. It puts a special emphasis on the energy, transport and water sectors in order to improve connectivity, reduce transport journey times and increase the reliability of the country’s water supply. Meanwhile, the second phase of the Kenya-Eastern Africa Regional Transport, Trade and Development Facilitation Project aims to improve the transportation of goods and people within the expanding Lokichar area in the Rift Valley, focusing especially on the Nadapal/Nakodok stretch of the Eldoret-Nadapal/Nakodok road in north-western Kenya to enhance connectivity with South Sudan.
LAPSSET
A key component of Kenya’s infrastructure plans and the Vision 2030 strategy for the next decade is the ongoing Lamu Port-South Sudan-Ethiopia Transport (LAPSSET) Corridor – a $24.5bn package of projects stretching across northern Kenya and East Africa and aimed at raising the level of socio-economic development for the whole region. Kenya is set to benefit in many ways, such as reducing its reliance on the overstretched Mombasa Port.
The LAPSSET project encompasses more than half of Kenya and will, according to the government agency in charge of the project, the LAPSSET Corridor Development Authority (LCDA), open up the under-developed north-eastern, eastern and Rift Valley areas, currently home to almost 40% of Kenya’s population. Speaking at an investment conference in August 2015, Silvester Kasuku, director-general and CEO of the LCDA, said the value of the project’s planned core investment alone is equivalent to half of Kenya’s GDP. “The economies of East and Central Africa continue to grow rapidly, which will necessitate more infrastructure and larger ports. The LAPSSET project will allow Kenya to support increased continental and international trade,” Kasuku told OBG.
Planned infrastructure for the scheme includes a new deepsea port at Lamu, a road and rail corridor linking the port to Ethiopia and South Sudan, and a pipeline for shipping crude oil from South Sudan. There are also plans for the creation of three resort cities on the rail line, a new international airport at Lamu, two domestic airports at Isiolo and Lokichokio, and the designation of a number of special economic zones (SEZs) at strategic locations. The LCDA expects that the project will, upon completion in 2018, triple investment space, bringing in 2-3% of GDP through its core projects and another 5-8% of GDP via attracted and generated investments. Passenger numbers at the Lamu airport, for instance, are expected to reach 1.2m, while the amount of cargo passing through it is to reach 2000 tonnes by 2030. The potential impact could be even greater in light of associated gains and new investment interest, Kasuku told OBG.
The Kenyan government’s Special Economic Zones Bill, introduced in August 2015, provides a legal framework for three SEZs to be set up in Lamu, Mombasa and Kisumu to encourage those locations to become centres for manufacturing and services. The bill allows businesses operating within the zones to produce solely for the export market, exempts them from taxes, and allows all capital and profits to be repatriated without foreign exchange limits. In anticipation of the rise in migrant labour that the zones are expected to create, the bill also stipulates that the government will provide work permits for 20% of each business’s full-time employees, with additional work permits made available for workers in specialised sectors. Each area will also host agricultural, industrial, science and technology parks.
Lamu Port
The Lamu Port component of the LAPSSET project designs will cost an estimated $3bn-5bn overall, according to the “Annual Review and Bulletin of Statistics 2014” from the Kenya Ports Authority (KPA). The initial “short-term plan” of the project is under way and is expected to be completed by 2020. Under the short-term plan, three out of 32 planned berths will be constructed at a cost of about $689m. While these first three berths will be publicly funded, the remaining 29 are open for private sector investment through a series of PPPs, with many concessions available for investors. The PPP Unit has designated the Lamu Port project as one of 47 priority PPP projects. Following US President Barak Obama’s visit to Kenya in 2015, a US-Kenya memorandum of understanding was signed, unlocking US private sector involvement in the Lamu Port project. In addition, a number of investor incentives have been agreed, such as reduced lead times on obtaining permits and non-taxable funds for investors. According to the LCDA, the internal economic rate of return for Lamu Port’s long-term plan is 23.4%, and developing the port is expected to transform the surrounding Manda Bay area into a centre for global trade, eventually moving more than 24m tonnes of cargo a year.
Mombasa Port
Kenya’s main port, PoM, managed by the KPA, serves as a centre for trade not only for the country itself but for the wider East and Central Africa regions. It is the largest and most active seaport in Kenya, and the second busiest in sub-Saharan Africa after Port of Durban in South Africa, which is the PoM’s chief competitor. Its second main competitor, Dar es Salaam in Tanzania, is itself currently on the receiving end of $750m in investment – a package aimed at doubling capacity to 28m tonnes by 2020 and raising this further to 34m tonnes by 2025 in a bid to increase its ability to compete with PoM.
According to figures released by the KNBS in its “Economic Survey 2015”, PoM saw 11.7% growth in total cargo throughput in 2014 to reach a total of 24.875m tonnes for the year, up from 22.3m tonnes in 2013 and 24.9m tonnes the year before, split between 83.5% for imports, 13.5% for exports and 3% for trans-shipment. Container traffic reached 1.01m (TEUs), up from 894,000 TEUs in 2013. The main commodities passing through Kenya’s ports in 2014 in terms of deadweight tonnage (DWT) were iron and steel (1.4m DWT), followed by plastics (662,000), rice (651,000), paper products (503,000) and motor vehicles (463,000). The top exports were tea (554,000 DWT), soda ash (336,000) and coffee (256,000).
With robust growth in traffic in recent years, PoM’s infrastructure has endured significant wear and tear. Added to this are inefficiencies in labour productivity and challenges posed by insufficient cargo off-take by rail and road, clearance delays and a lack of mechanisation. With financial and technical support from TradeMark East Africa, a non-profit, the Mombasa port improvement works for 2011-16, which have a projected value of $45m, are being carried out in conjunction with other initiatives, with the aim of boosting the port’s capacity by raising productivity, revising regulations and upgrading infrastructure.
Expansion Plans
In keeping with Kenya’s goal to position PoM among the world’s top 20 ports in line with Vision 2030, the KPA has received KSh34bn ($374m) in financing to increase the port’s capacity, including plans for a new container terminal pegged for completion in 2020. According to figures published in a logistics capacity assessment for Kenya by the UN’s World Food Programme (WFP), the port currently has 19 berths: 12 for general cargo, one for bulk grain, four for containers and two serving as oil terminals or jetties. Stacking yards situated in the container terminal currently cover 197,000 sq metres. The container terminal’s original capacity was for a throughput of 250,000 TEUs annually, but with cargo volumes increasing substantially each year, the terminal handled 479,000 TEUs in 2006, almost reaching its capacity limit of 540,000 TEUs. The addition of berth 19 in 2013 provided a medium-term solution to the problem with additional stacking capacity of 200,000 TEUs per year. In 2013 construction also got under way on a second container terminal, which is expected to raise the port’s capacity by 1.2m TEUs. Phase one is set for completion in early 2016.
Increasing capacity at PoM will be vital going forward: according to local media sources, the number of ships calling at PoM increased by 3.6% in 2014, while total imports passing through increased by 8.3% (20.8m tonnes) and exports rose by 12.8% (3.4m tonnes). According to the KPA, cargo traffic at PoM grew by 11.5% from 2013 to 2014, reaching 24.87m tonnes. The occupancy rate of the 137,000-sq-metre primary container terminal in 2014 was 93%, up from 82.7% in 2013. Meanwhile, dwell time for cargo at the port shortened from 4.9 to 3.9 days in 2014, with vessel turnaround times staying consistent at 3.5 days.
Other efforts focus on modernising machinery to boost efficiency and reduce dwell times while raising the speed of discharge and loading. A recent move to dredge the main entrance channel and widen the turning basin has meant the port can now handle Panamax (mid-size) vessels; in late 2014 PoM registered its millionth container handled that year. In addition, 12 gantries with a working load of 45 tonnes each were purchased from Finnish equipment supplier Cargotec, boosting capacity by 30%, according to the port’s managing director, Gichiri Ndua.
Single Window
Two initiatives introduced in 2014 are expected to raise key trade performance indicators and have positive impacts on distribution costs and overall trade between Kenya and other East African countries: the Kenya National Electronic Single Window System (KNESWS) and the Mombasa Port Community Charter. The charter has been designed to improve cargo-clearance procedures and speed up the movement of goods, while the KNESWS will provide traders with a single entry point for lodging documents online for processing and approval and for making payments electronically for fees, levies, duties and taxes due on imported and exported goods. Agayo Ogambi, membership development officer at the Shippers Council of East Africa, told OBG that the KNESWS is expected to reduce delays, enhance transparency and reduce incidents of rent-seeking through its automated process. Upon its launch, President Uhuru Kenyatta told local media that the new system, once fully operational, would shorten cargo dwell times at PoM and Jomo Kenyatta International Airport (JKIA) to a maximum of three days and one day, respectively. The KNESWS is also expected to help ease port congestion and reduce fees for storage, demurrage and other surcharges, translating into faster turnaround times for trucks from the port and decreasing the cost of goods for consumers.
Airport Upgrades
JKIA in Nairobi is one of Africa’s largest international airports, the busiest in East and Central Africa, and the seventh busiest on the continent. According to the KNBS, total passenger traffic nationwide stood at 8.9m in 2014, up 8% on the previous year, while cargo traffic rose by 6.5% in that period to reach 279,000 tonnes. JKIA, originally built to serve 2.5m passengers a year, now has a capacity of 7.5m and handles 70% of Kenya’s passenger traffic – almost 7m people – and 90% of its cargo.
Some 49 airlines currently use JKIA, and with passenger numbers rising, the airport is attracting more international carriers, including China’s largest airline, China Southern Airlines, which began flights to Nairobi in August 2015. According to COMESA’s “2014 Investment Guide”, JKIA witnessed a substantial rise in cargo traffic passing between Europe and Asia in 2014, alongside growth in imports from Asia and the Middle East. Air-freight volumes are responsible for a majority of Kenya’s exports to Europe, including from the thriving horticultural industry, which has been growing by roughly 5% a year.
These growth trends are fuelling long-term expansion plans for JKIA worth $653m, according to the Kenya Airports Authority, including more space for aeroplane parking, new taxiways, rapid-exit taxiways and additional security, as well as new terminals and a runway upgrade (see analysis). Such improvements are expected to attract more flights and facilitate long-haul flights to the US – once security clearance is achieved from the US Federal Aviation Authority – and other destinations. An increase in chartered flights taking holiday travellers to the coast, for example, presents additional growth prospects for Kenya, as a new and growing contingent of middle-class locals, many of whom have never flown before, take to the air. “It is expected that low-cost carriers will create their own market segment in East Africa, catering to those who previously could not afford to fly”, Austin Nyawara, regional manager for East Africa and the Middle East at South African Airways, told OBG. Fly540 Kenya has rapidly expanded its operations since making its first flight in 2006, and aside from its domestic flights it now serves international destinations in East Africa. Even technology is providing a boost to air traffic volumes, according to James Kimuyu, manager of planning at the Kenya Civil Aviation Authority. “The option to purchase tickets through mobile money transfer services is encouraging passenger numbers,” he told OBG.
Railways
In 2006 Kenya Railways (KR) granted a concession for operations along its 2066-km railway network to Rift Valley Railways (RVR) for a period of 25 years for freight services and 1 year (renewable) for passenger services. RVR is currently investing an estimated $300m in improvements to the one-metre-gauge track which, built in 1908, is operating well below capacity due to its poor condition and the slow speeds of its current rolling stock. Meanwhile, the construction of a modern, high-capacity standard-gauge railway (SGR) network is expected to transform the transport industry in the East Africa region. KR is also planning to develop commuter rail networks in Nairobi, Mombasa, Nakuru, Eldoret and Kisumu, as well as a link to JKIA.
The SGR Project
The Mombasa-Malaba SGR, Vision 2030’s flagship project and the largest undertaking in the plan’s current phase, is expected to transform rail transport not only throughout Kenya but in the East Africa region as a whole. When it is completed, trains will be able to travel at speeds of up to 80 km per hour for freight and 120 km per hour for passengers, significantly reducing journey times.
Overseen by the KR, work began in October 2013 on the project’s first phase connecting Mombasa to Nairobi. The 500-km route, which is being carried out by China Road and Bridge Corporation, will incorporate 30 km of bridges and wild animal crossings along sections of the line that pass within national park boundaries. Phase two of the project, running between Nairobi and Kisumu, is due to begin in fiscal year 2015/16 and scheduled for completion in 2017. A commercial contract for an extension of the SGR from Nairobi to Naivasha has been signed, and there are also plans in the works for the railway to eventually run up to Uganda’s capital, Kampala, and from there onwards to Kigali in Rwanda.
With an estimated cost of $4bn, the majority of funding for the project is being provided by China Eximbank, with the Kenyan government supplying another 10%. According to the World Bank, the government borrowed $3.6bn from China in the fourth quarter of fiscal year 2013/14 for the Mombasa to Nairobi line, contributing to a rise in Kenya’s public debt in the same period. Media sources report that for fiscal year 2014/15, some KSh22.9bn ($251.9m) in public spending was set aside for the project.
According to Kenya’s cabinet secretary of the national Treasury, Henry Rotich, in comments to local media in December 2014, the SGR project would result in a GDP growth rate of 6.5% in 2015 and 7% by 2017. The new railway is also expected to cut rail transport costs from $0.80 to $0.20 per tonne per km, as well as reduce journey times, commodity prices and reliance on road transport. Freight trains will reportedly carry up to 216 TEUs per trip.
Cargo Transport
According to the IFC, East Africa has some of the highest cargo transport prices in the world. Up to now, the region has relied heavily on trucking to move cargo around. Rail, though much cheaper, accounts for only 10% of the region’s transport market due to low operating capacity, poor maintenance, under-investment and high fuel prices. At present, 70% of Kenya’s imports end up in Nairobi, incurring higher transport costs and journey times from PoM as well as inconveniencing businesses and pushing up prices for consumers. Kenya has long been aware of the need to bring services closer to customers by, for example, introducing dry ports.
The KPA currently operates three inland container depots, all of which are accessible by rail from PoM: the Inland Container Depot Embakasi in Nairobi (ICDE), the Inland Container Depot Kisumu and the Eldoret Inland Container Depot. Because the rail network is somewhat out-dated, however, capacity at the depots is under-utilised. The depot at Nairobi, for example, can accommodate up to 180,000 TEUs but has so far held only 46,000 TEUs at most.
This situation is set to change once the SGR comes on-line, at which point 40% of cargo from Mombasa will pass through the ICDE. Yet since the port is not yet capable of accommodating the extra cargo traffic the new railway will help generate, plans are being made to bring the ICDE up to par, with the assistance of TradeMark East Africa. Construction for these upgrades – which are to be completed by 2017 to coincide with the opening of the SGR – will include more stacking yards with the capacity to stack containers five-high rather than two-high. The number of trains that ICDE handles will increase from one or two a day to four long trains, each carrying up to 200 TEUs. Moreover, according to KR, distribution costs for journeys between Mombasa and Nairobi are expected to drop from the current level of $0.50 per km to the European standard of $0.20 per km, thus lowering the cost of business and placing rail in a more advantageous position for regional competitiveness. The SGR will also reduce transport costs, which are currently at levels of 30% or more, compared to the international standard of 5%.
Around 95% of Kenya’s cargo travels by road, with the average journey from Mombasa to Nairobi taking around 25 hours, according to the AfDB’s “Kenya Country Strategy Paper 2014-18”. With the SGR in full operation, the same journey will take only four hours. Exporters will also be able to benefit from more predictable train schedules, which to date have proved a significant constraint. Front-hall costs are also expected to decrease, as back-hall containers will be able to take on goods for shipping back to the ports.
Road Pressures
The high levels of cargo and passenger traffic that are currently transported by way of Kenya’s 160,886-km road network are economically unsustainable, according to the AfDB. The bank reports that just 7% of Kenya’s road network is paved, amounting to 2.2 km of paved road for every 10,000 inhabitants – below the EAC average of 2.53 km. Maintenance is also becoming an increasingly important issue due to the steadily rising number of cars on Kenya’s roadways, which places further strain on the road network, especially in urban areas. According to the KNBS, the number of new vehicles registered in 2014 reached 102,606, a rise of 9.1% on 2013.
The road network is overseen by the Kenya Roads Board, with the bulk of implementation carried out by the Kenya National Highways Authority (KENHA). According to the UN’s WFP, Kenya’s road classification system, now three decades old, covers only 61,936 km of the entire 160,886-km road network, while the remaining 98,950 km is not classified. KENHA is responsible for managing and developing all the country’s class A-C roads, namely all international trunk roads, national trunk roads and primary roads. The government’s total expenditure on roads in fiscal year 2013/14 was KSh100.3bn ($1.1bn) with most funds in this period going to trunk roads.
In 1994 a Road Maintenance Levy Fund was established as a secure and sustainable source of finance for road maintenance, but this is now falling short of demand, according to the AfDB’s “Kenya Country Strategy Paper 2014-18”. The WFP notes that the country’s paved roads are tarnished by “cracking and structural destabilisation”, especially along the routes with the heaviest traffic. Adding to this, unpaved roads elsewhere in Kenya can quickly become damaged or impassable during periods of high precipitation – for example, the bridge over the Ortum River in the West Pokot district, about 150 km north of Eldoret, has been washed away before by heavy rains.
Expanding the source of funds for Kenya’s road network for essential maintenance and expanding the network will be vital going forward. Yet efforts by the Kenya Roads Board in 2015 to double the levy for roads maintenance through increased petrol prices have proven controversial among consumers, who question the efficacy of maintenance done under the existing budget. The government’s long-proposed introduction of toll stations on major roadways to help pay for improvements is similarly unpopular.
Nonetheless, plans were finalised in August 2015 to install toll stations along some of Kenya’s major roadways, including the Southern Bypass, Thika Super Highway and the 482-km dual carriageway connecting Mombasa and Nairobi. Announcements were also made for tendering in May 2015 for the $2bn toll-road contracts covering some 800 km of road, in addition to about $3.2bn worth of contracts for extending the country’s paved road network to double its current length. Private sector funds will also be utilised, and a Road Annuity Fund has been established to pay back investors over a specified period of time.
Superhighways
In efforts to modernise the road network, new superhighways are being built that will provide a speedier link between Kenya’s major urban centres. Inaugurated in November 2012, the Nairobi-Thika $360m superhighway is the first of its kind in Kenya. Some 50 km long and eight lanes wide, the road links a number of prime locations, and has reduced the journey time between Thika and the capital from two hours to 40 minutes. The new highway is seen as a vital component of the Great North Trans-African Highway linking Cape Town to Cairo. The Nairobi Southern Bypass, a project that aims to reduce traffic congestion in Nairobi and its suburbs, is currently under construction by the China Road and Bridge Corporation and is set to be finished in 2015. China Eximbank put up substantial funding for the bypass, at 85% of the total cost, with the government providing the rest. The bank also supplied $100m for the Nairobi-Thika superhighway, for which the AfDB put up $180m and the government $80m.
Outlook
Despite delays on some projects, Kenya’s transport and logistics sector is proving itself robust, with lucrative prospects for the long term. Continuing to benefit from both private and public sector investment and both domestic and multilateral support, the sector’s direct and indirect impact on GDP growth means it will remain a focal point for achieving Vision 2030 targets. Knock-on effects are expected for the rest of the country, providing more economic inclusion for local communities and opening up remote areas to development. Foreign government and private interest alike has picked up in 2015, underscored by agreements with US firms to take part in port developments, among other deals. Reciprocal gains between infrastructure, construction, real estate and ICT are expected to drive momentum as Kenya moves consolidate it’s role as a regional logistics centre.
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