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Corporate

Sh221bn boost for roads and railways

A train at the Rift Valley Railways station. Development of  rail transport will ease pressure on roads.  Fredrick Onyango
A train at the Rift Valley Railways station. Development of rail transport will ease pressure on roads. Fredrick Onyango 

A record Sh221.4 billion will be spent on infrastructure development this financial year, further opening up the rural economy to investments and reducing the cost of doing business.

The allocation to infrastructure projects represents a fifth of the Sh1.1 trillion Budget and beats the previous year’s allocation by Sh56.6 billion. The money will go into developing railway systems and roads besides expanding generation and distribution of electricity.

Business leaders have identified inadequate and poor infrastructure as one of the major challenges in doing business alongside corruption, weak institutions and an unpredictable macro-economic environment.

The 2010-2011 Global Competitiveness Report ranked Kenya at 102 of 139 countries surveyed in terms of their infrastructure development. Analysts expect the consistent focus on infrastructure to boost economic growth in coming years. “Improving infrastructure will have a great multiplier effect for the economy by lowering transport costs and opening up more areas for development,” Prof Joseph Kieyah, an analyst at the Kenya Institute of Public Policy Research and Analysis.

The budget for roads, including highways, urban, and rural roads, has been upped from Sh90.2 billion in the previous financial year to Sh100.9 billion. The government is betting on the completion of the massive road projects to expand trade activities between the country and its neighbours in the region.

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The government has earmarked Sh3.25 billion to kick-start the construction of a standard gauge railway connecting Mombasa — where the country’s sea port is located — and Malaba in western Kenya with a branch to Kisumu.

The completion of the project is expected to boost the speed at which imported goods are transported inland besides easing the pressure on roads that have been damaged by cargo trucks in the wake of the dilapidated railway network. It costs about Sh100,000 and takes at least a day to transport a 20-foot container from Mombasa to western Kenya and the planned modern railway is expected to cut this to about Sh40,000 and four hours, Finance minister Uhuru Kenyatta, said.

Mr Kenyatta said the government has opened talks with donors and investors to fund the project whose cost has been pegged at $4 billion (Sh340 billion).

Another Sh1.85 billion will be used to modernise commuter railway services connecting the city centre to the Jomo Kenyatta International Airport, with residents of estates lying along the route such as Embakasi, Pipeline, and Imara Daima benefiting from the service.

The government will spend an extra Sh1 billion to upgrade commuter railway services linking Nairobi to Thika town.

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