A multi-donor study of 24 African countries finds that Kenya’s infrastructure compares favorably with its neighbors, but still falls a long way short of what is needed to reach middle-income status. Kenya has made some important progress in recent years, according to Africa’s Infrastructure: A time for transformation—a diagnostic study by the World Bank and other partners, including the African Development Bank, African Union, Agence Francaise de Developpement, Department for International Development, New Partnership for Africa’s Development, Public-Private Infrastructure Advisory Facility and Sub-Saharan Africa Transport Project.. The introduction of mobile telephony has brought 90 percent of Kenyans within range of a GSM signal, one of the highest coverage rates in Africa. Power sector reforms have led to major efficiency gains and put Kenya’s power utility on a path to financial recovery. Road maintenance has been properly funded, saving huge amounts in road rehabilitation costs, since every dollar spent on maintenance saves four in rehabilitation. But addressing some of the key infrastructure bottlenecks that remain could contribute much more to Kenya’s economic growth. Power remains Kenya’s largest infrastructure challenge. In recent years, outages have led to economic losses of two percent of Gross Domestic Product (GDP) and imposed substantial costs on firms running back-up generators. To keep pace with growing demand over the next decade, Kenya needs about 1,000 MW of additional capacity and greater integration with power networks in neighboring countries, at a cost of about Kshs 80 billion per year. The port of Mombasa is probably Kenya’s largest single infrastructure bottleneck. Yet management improvements, investments in terminal facilities, and reform of critical road and rail interfaces can substantially increase transit through the port. Introducing a strategic investor, as Kenya Airways did with great success, may be a good way forward. In telecommunications, the imminent landing of three submarine cables—SEACOM, the East African Submarine System (EASSy), and the East African Marine System (TEAMS)—brings the potential to slash Kenya’s internet and international telecom charges by as much as half. To realize this gain, the Government does not need to spend any money; it just needs to make sure that there is healthy competition between the landing stations. Access to household services remains low in Kenya, especially in poorer areas. In Kibera and Mathare, for example, only about 20 percent of households have access to essential services. Investments in infrastructure are crucial to improve living conditions in these areas, but these investments will not work unless the people living there have the opportunity to own their homes. In the poorer neighborhoods of Dakar, Senegal, where a majority own their homes, over 70 percent have access to essential services—even though they have much less income and education and much lower employment levels than their peers in Nairobi. Infrastructure improvements added half a percentage point to Kenya’s per capita GDP growth over the last decade, but better spending could add as much as three percentage points to GDP growth. The good news is that Kenya in 2006 was already spending almost enough on infrastructure to achieve middle-income performance. The infrastructure study estimates that this would require spending about Kshs 160 billion a year for ten years—only about KShs 16 billion more than it was already spending in 2006. What Kenya needs to do now is ensure that its infrastructure policies are sound and its spending directed to the right things: less on Information and Communication Technology (ICT), and more on road rehabilitation and power generation. The Government has been moving in the right direction over the last few years. The journey has already begun. The author is Johannes Zutt, World Bank Country Director for Kenya |
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