Infrastructure projects to speed up economic growth by 3pc yearly –report
Road construction in Eldoret town. PwC report says ongoing infrastructure projects in Kenya could accelerate the pace of economy growth by three per cent yearly and lift the country to a higher middle income status. PHOTO | FILE |
What you need to know:
Report centres on energy, mining, telecoms, real estate, water, transport and logistics sectors.
Investments would help unlock the economy’s potential and avoid the middle-income trap, where it stagnates at the same level.
Ongoing infrastructure projects in Kenya could accelerate the pace of economy growth by three per cent yearly and lift the country to a higher middle income status, a new report says.
The report on the status of infrastructure in nations in East, South and West Africa by consultancy firm PricewaterhouseCoopers (PwC), launched Thursday in Nairobi, highlights the role of a robust economic hardware in powering growth.
“Improving Kenya’s infrastructure up to the level of middle income countries, for example, would boost annual growth by more than three percentage points,” the report reads.
Report centres on energy, mining, telecoms, real estate, water, transport and logistics sectors.
Officials said that the investments would help unlock the economy’s potential and avoid the middle-income trap, where it stagnates at the same level.
Tabor Almassy, East Markets Deals Leader at PwC said that Kenya should be looking to join the ranks of upper middle income economy by investing in sectors that would create jobs and open new opportunities.
He said that such investments were timely to support the ever ballooning population in the region, with a broad youthful populace.
The report noted ongoing projects including the expected injection of 5,000 megawatts of renewable energy into the grid by 2016.
Others mentioned but are yet to come on stream include the Lamu Port-Southern Sudan-Ethiopia Transport (Lapsset) corridor, a million-acre Galana-Kulalu irrigation project and the construction of 10,000km of roads.
But it also shines the spotlight on ageing power infrastructure that hurts businesses.
Kenya is undertaking multibillion-shilling projects including the standard gauge railway with the hope of improving its economic fortunes.
Kenya’s GDP per capita stands at Sh116,037 ($1,246), slightly above the $1,045 threshold set by the World Bank for a country to join the lower middle-income bracket.
Upper middle income nations have a GDP per capita of between $4,126 to $12,745 and high income economies at $12,746 or more.
The survey involved interviews with 95 industry players from development finance institutions, private financiers, government organisations and private construction companies.
They raised issues such as funding constraints, rigid regulatory and policy environments and shortage of technical skills as key challenges to infrastructure development.
“It is estimated that for every dollar spent on a capital project be it utilities, energy, transport or waste management, an economic return of between five per cent and 25 per cent is experienced,” said PwC director Jonathan Cawood.
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