Kenya records bulk of infrastructure project in East Africa

NAIROBI: Kenya contributed the bulk of large capital infrastructure projects implemented in East Africa in 2014, followed by Uganda, Ethiopia, Tanzania and Rwanda respectively, a new study released on Tuesday reveals.

According to the third edition of the annual Deloitte African Construction Trends Report 2014, transport sector accounted for 59 percent of all the projects in Kenya, representing a growth of 17 percent, while 37 percent of projects were focused on energy and power capacity development.

However, the report which was launched in Nairobi notes that mega infrastructure projects in the East African region dropped significantly in 2014 as activity increased in the rest of the continent.

“While there seems to have been a dip in current activity, there are a large number of significant projects in the planning phase that have not yet reached financial close and are thus not yet reflecting in the statistics of projects under construction,” Mark Smith, the Head of Infrastructure and Capital Projects at Deloitte East Africa, told journalists in Nairobi.

In the East Africa region, the Chinese companies are mainly carrying out various infrastructural projects in different sectors that include energy, transport and real estate as relations between the East African nations and China soar.

The most famous project in Kenya is the Thika Superhighway constructed at a cost of 330 million US dollars. The road cemented China’s construction authority in Kenya, and introduced the Chinese to the ordinary Kenyan.

China is also constructing the Standard Gauge Railway whose construction has started and is expected to have the same effect on ordinary citizens, business persons and the Kenyan economy.

The railway line which will run from Mombasa at the Kenyan Coast through Nairobi to Malaba on the Kenya-Uganda border is expected to improve movement of goods and people across the East Africa region.

According to the report by the global consulting firm, only 51 projects were identified in the region, compared to 93 recorded the previous year, a 55 percent drop. The total value of the projects slid from 67.688 billion dollars to 60.671 billion dollars.

The rest of the continent recorded an increase in value of projects that were executed during the year.

“This remains critical for Africa’s economic growth momentum, particularly to bolster the manufacturing sector and facilitate trade within the continent,” Smith added.

The oil and gas boom in the region continued, despite this not yet manifesting in mega projects breaking ground. It is estimated between 60 billion to 70 billion dollars needs to be invested in infrastructure in the oil and gas sector.

Overall, the value of mega projects under construction across Africa in 2014 stood at 326 billion dollars, a 68 percent growth from 222 billion dollars the previous year, says the report.

Whereas the number of projects dropped to 257 from 322 evaluated in 2013, the average value rose to 1.27 billion dollars from 689 million dollars the previous year.

The Southern Africa region contributed the biggest share of the projects, accounting for 46 percent of all the projects in the continent, valued at 145 billion dollars. It was followed by West Africa, East Africa, Central Africa and North Africa.

In 2014, 27 percent of the total projects collected were above the 1 billion dollar mark in value, an 11 percent jump.

The report says international development finance institutions were the top financiers of majority of the projects, while new foreign investors emerged including private Israeli companies, public owned funds and organizations from the United Arab Emirates as well as private Australian companies.

Source: Daily Times