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AfricaMoney | September 22, 2017

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Kenya to become hub for intra-regional trade on infrastructure boost

Kenya to become hub for intra-regional trade on infrastructure boost

Kenya is expected to benefit from massive infrastructure projects being implemented across the country, thus transforming into a hub for intra-regional trade in Africa, according to a new study by research firmFrost & Sullivan.

Anew report by research firm Frost & Sullivan entitled‘African Infrastructure Tracker: Kenya’, has noted that mega infrastructure projects planned for East Africa are expected to create unique opportunities, opening up new markets in Kenya, Uganda and Ethiopia.

“Transport infrastructure has undergone major upgrades over the past five years in order to support the high trade demand in the East African region,” said Frost & Sullivan’s Senior Economic Consultant Craig Parker.

“The Nairobi Southern bypass, for example, was commissioned in 2012 and is already 40% complete,” he pointed out.

Kenya is implementing several infrastructure projects including the construction of the first phase of the standard gauge railway linking Mombasa and Nairobi.

The project is expected to result in both shorter freight delivery time and lower transportation costs, boosting regional trade. An estimated USD 5.14 billion (Sh500b) has been dedicated to road project investments in Kenya.

However, disputes and illegal occupation of land in areas where infrastructure projects are underway, or are about to take place, have resulted in high relocation costs for global firms. This, according to the report, will culminate in delays along with escalating project costs.

Furthermore, legislative changes to the tendering process in Kenya have placed limitations on the type of projects global firms can get involved in.

In order to address these challenges, and be accepted for infrastructure project tenders, global firms will be required to form local partnerships or joint ventures with domestic firms.

“Although private participation in infrastructure development is growing and tender processes are becoming more transparent, forging local partnerships will remain crucial for entering the Kenyan market successfully,” reiterated Parker.

This explains the priority put on public-private partnerships, which boost the prospects for institutions that can offer finance to firms, he concluded.

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