Press Center | Freight Shipping Logistics News

As Kenya marked 50 years of Independence last week, a World Bank report singled out four things that the country has achieved on the social front.
As Kenya marked 50 years of Independence last week, a World Bank report singled out four things that the country has achieved on the social front.

“Kenyans are living two decades longer; the fertility and infant mortality rates have been cut in half; and school enrollment, at both primary and secondary levels, has more than doubled,” the report released on Tuesday last week read in part.

On the economic front, the bank noted that Kenyans are now eight times richer than they were at Independence, much of the wealth coming from the services sector.

In the financial sector, “Kenya is now the third largest in sub-Saharan Africa after South Africa and Nigeria.”

Similarly, one would add that in terms of ICT, Kenya ranks third after South Africa and Nigeria.


But equally disturbing was the fact that four out of 10 people still live in extreme poverty.

On the health front, the maternal mortality rate is among the highest in Africa, with 488 deaths per 100,000 live births.”

And despite introduction of free tuition at secondary school level, the enrollment is at a low 32 per cent.

While Kenya’s largest source of wealth is the service industry, the “learning achievement levels are well below their potential and what is needed to fuel a modern market economy...

“GDP growth, while solid, has yet to take off at the rapid, sustained rate needed to transform the lives of ordinary citizens,” the report notes.

The next 50 years are expected to be transformative, pushing the country to middle income status in the next 12 years.

In this bid, a number of projects have been lined up.

The Smart Company team samples some of the projects that would have the biggest impact on the lives of Kenyans and their push to become a middle income nation by 2030.


1Jomo Kenyatta International Airport expansion

Building of a new airport terminal is expected to transform the face of Kenya.

Scheduled to be completed by 2017, the new JKIA terminal adds 20 million more passenger capacity, 50 international and 10 domestic check-in positions; 32 contact and eight remote gates; an associated apron with 45 aircraft stands and linking taxiways.

The impact of this on the economy will be huge.

“The increase in capacity will unlock suppressed growth which will stimulate other sectors of the economy,” says the Kenya Airports Authority.

The first is the repositioning of Nairobi as the gateway to eastern Africa, attracting multinationals to set up regional offices in Kenya.

This will create employment and drive up consumption.

Easy connections to every corner of the world would mean that investors wouldn’t have to worry about how to get to their next destination if they need to make a stopover in Nairobi for a business tour or talk.

Currently, the airport is estimated to generate at least 10 per cent of the country’s wealth.

A revamp can only be a boost to the economy.

2 One-million acre Galana-Kalulu Irrigation Scheme

If successfully carried out, the Galana-Kalulu irrigation scheme will be the largest such project in East and Central Africa.

The scheme alone could achieve what the government plans to accomplish in 13 years.

Under the Vision 2030 development blueprint, Kenya was to put 80,000 acres of land under irrigation each year, which would have taken the government 12.5 years to hit the one-million-acre threshold.

Once completed, the project would see 500,000 acres of land put to maize production, 200,000 acres to sugar cane, 150,000 acres to beef and game animals, 50,000 acres to horticulture, 50,000 acres to dairy animals while a further 50,000 acres would be dedicated to growing fruits such as mangoes and guavas.

Beyond creating employment, the project would save the government billions of shillings spent every year in importing maize.

The real impact of the project on the economy would be evident, as last week’s report by the World Bank singled out drought as a key risk in the country’s growth plan.

The report estimates that drought could slow down growth by up to 3 per cent, largely because it would force the government to increase food imports.

3 Digital migration

Whenever it happens, after experiencing four false starts, digital migration will push the country to the next level of information technology.

It will help free frequencies needed for the 4G network rollout, putting the country on the path to high speed broadband deployment.

Under the National Broadband Strategy released early in the year, it is estimated that almost half of the Kenya population would be hooked to high speed Internet by 2017.

By then, the cost of access should have fallen from the current 30 per cent of average national income to 10 per cent.

This would unlock investment, boosting innovation and access to services.

The success of the free primary school laptop agenda depends on availability of high speed connectivity.

Broadband will also make it possible for deployment of e-healthcare services, e-education, and will boost employment in rural areas while taking government services to even the remote of corners.

The switch to broadband connectivity will also give Kenya a competitive edge in the region “as very few countries in Africa have established a similar framework.”

4 LAPSSET, (Lamu Port, South Sudan, Ethiopia Transport Corridor)

Launched last year, the multi-trillion Lamu Port, South Sudan, Ethiopia Transport Corridor is expected to open up northern Kenya, a region that is currently scantily served.

By linking the Kenyan coast to South Sudan and Ethiopia through road and rail networks, the project would open up new frontiers of cross-border trade.

The project would also be the gateway to Kenya’s newly-found wealth — oil and natural gas — and also connect oil fields in South Sudan and Ethiopia.

The proposed second port of Lamu is expected to reposition Kenya as a gateway to eastern Africa.

Other components of the project are resort cities, which are hoped to expand activity in the local tourism sector, and an oil refinery to be based either in Lamu or Isiolo.

The entire Lapsset project has major economic benefits for Kenya as it will open the country’s communication links with the neighbours that are necessary for development of trade, and also contribute to foreign income from increased tourism.

5 Devolution

In reshaping Kenya over the next 50 years, devolution will be a make-or-break venture.

If successfully deployed, county governments have the potential to transform Kenya by fast tracking development at grassroots level.

Building of roads that were previously not featured on the central government priority list, and giving entrepreneurs and farmers access to markets, will transform rural life, encompassing over 60 per cent of the population currently.

Talk of new cities and investor forums!

Transfer of almost 40 per cent of the national budget to the county level is expected to accelerate the trickle-down effect to millions of Kenyans in rural areas.

Conversely, devolution carries the risk of causing chaos to the country’s fiscal and monetary discipline.

Introduction of new taxes, low absorption of funds and diversion of development funds to recurrent expenditure such as paying salaries top the list of what could go wrong with the county government model.

6 5000-MW power projects

One of the biggest complaints by manufacturers in Kenya is the high price of electricity, which when factored into the cost of finished goods makes Kenyan products uncompetitive in regional markets.

The push to add 5,000 megawatts of power to the national grid in the next 40 months is thus the biggest investment Kenya will be making in increasing its competitive edge.

The extra power is expected to cut electricity bills by 25 per cent.

The project also seek to ensure sufficient electricity supply to spur industrialisation, thereby contributing to Kenya’s transformation into a middle income economy by 2030.

Delivery of this project is also hoped to increase access to power from the current below 30 per cent to 75 per cent of the country’s population before the lapse of the 40-month period.

The country’s power generation capacity currently is about 1,700 megawatts, out of which 46 per cent is hydro electricity whose supply is curtailed during dry weather.

In the ambitious plan, the government hopes to generate more energy from geothermal, wind, coal and liquefied natural gas.

7 Financial innovation

By April 2013, Kenya had at least 100,000 points of contact where one could initiate or complete a financial transaction.

In 2007, such contact points were less than 800, largely comprising bank branches.

Thanks to mobile money, 75 per cent of the adult population, about 23 million people, have had at least one interaction with mobile transactions.

The next innovation, and one that could greatly transform the country, is the linking of mobile money with formal banking to mobilise savings and channel credit to production and consumption sectors.

This has already started, with commercial banks tapping into mobile money to launch financial products — M-Shwari by CBA, PesaMob by Family Bank, and M-Benki by KCB, for example.

As the World Bank notes in the country outlook report, “increasing domestic financial intermediation, mobilising domestic savings, and making these savings available for domestic investment are critical components of achieving Vision 2030 growth targets.”

But equally important is “ensuring adequate financing for SMEs, the dominant form of business organisation in Kenya.

This is an important part of the equation,” says the report.

Already, Kenya is ahead of its peers, with 17.4 per cent of bank lending to SMEs, compared with five per cent in Nigeria and eight per cent in South Africa.

8 Standard Gauge Railway

“This is Kenya’s chance to prove that it is an economic powerhouse by linking East and West Africa, failure to which the economic loss would be huge,” notes Transport and Infrastructure Secretary Michael Kamau.

The modern standard gauge railway set to be operational by 2018 is poised to haul 28 million tonnes of cargo annually between Kenya, Uganda and Rwanda.

That would be over 17 times the current capacity.

Currently, rail operator Rift Valley Railways lifted 1.6 million tonnes of cargo last year, which is a paltry 7.4 per cent of the port’s total volume.

This would clear the roads of huge trucks, saving the country millions of shillings used in road maintenance.

Of much importance, also, would be an increase of Mombasa port’s competitiveness, compared with Dar es Salaam and Bagamoyo port (under construction) in Tanzania.

“The project would resolve perennial freight congestion at the port and secure the position of Mombasa as the port of choice in the region,” said the Transport Cabinet secretary.