Kenya Clears the Air on Private Investors in Major govt Project

Lapsset Project

Lapsset Project

Kenya has been focusing on investing close to 30 percent of its budget in developing key sectors to enable fast tracked economic growth. These sectors include transport, energy, water and sanitation, and environment-related projects . The government has approved 56 projects for the Public-Private Partnership (PPP) initiative, while eight more are awaiting Cabinet approval before they are opened up to investors. These will see an increase in the level of private investors on these government projects.
According to The African Development Bank ,

  1. of the country’s 160,886km road network, only 7 per cent is paved, putting the total length of paved roads per 10,000 inhabitants in Kenya at 2.19km, which is less than the EAC member countries’ average of 2.53km.
  2. fewer than 20 per cent of Kenyans are connected to the national grid.
  3. The budget is further constrained by the relatively high debt-to-GDP ratio which stands at about 52 per cent. This is well above the IMF recommended threshold of 50 per cent for countries at Kenya’s development level.

Over the next five years, the country intends to spend over $40 billion (KES 3.4 trillion) — or three times its annual budget — in building new infrastructure, energy investment and transport investments.

KenGen plans to invest $4.5 billion (KES 380 billion) in building and expanding power plants in the next five years, while Kenya Power says it will spend $2 billion(KES 170 billion) on expanding distribution lines.

The government has already awarded a tender for the construction of the first three berths at the LAMU Port, which is also part of the LAPSSET project. This involves the construction of a series of roads connecting Ethiopia, Uganda and South Sudan to the proposed Lamu Port, which also help open up northern Kenya.

Ethiopia is currently developing a rail network linking it with the port of Djibouti, which it sees as the primary entry and exit port for its imports and exports, meaning it is focusing on this project rather than on Lapsset.

South Sudan, for its part, while clearly in need of another port to reduce dependence on Sudan, is embroiled in civil war. The two scenarios have left Kenya with the pressure of securing initial funding for the $23 billion dollar project.

Courtesy The East African team

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