Rapid Infrastructural Development Projects Shaping the Business Landscape in Kenya

“I’ve used the railway once, and it was an amazing 5 hours trip. No fatigue, no muscle pain. It’s a great improvement to the 1901 iron-snake. I think SGR has killed the snake!”

With more than 500 km of coastline, Kenya operates the region’s largest and busiest port, the port of Mombasa (IndexMundi, 2019). The port serves seven countries which include Uganda, Rwanda, Burundi, Tanzania, DR Congo, Ethiopia, and South Sudan (PMAESA, 2020). Investment in sustainable infrastructure has a great influence on the regional economy. This has been a priority for the Kenyan government under the program Vision 2030, and the progress towards the realization of this vision is impressive.

In an effort to maintain the regional hub status, the government over the past two decades has been involved in planning, funding or seeking for funding, and implementing various strategic mega-projects. The Thika Super-Highway (TSH) and the Standard Gauge Railway (SGR) take precedence as the star projects successfully rolled out in the country.

Other superb projects include the Konza Technology City, The LAPSSET Corridor Program, Nairobi-Mombasa Highway, the Mombasa port expansion and the Bus Rapid Transport project.

The LAPSSET Corridor Program is the most ambitious flagship construction program and is aimed at serving over 160 million citizens of Kenya, Ethiopia and South Sudan. The program involves construction of high capacity roads, ports, oil pipeline, integration of the SGR, airport expansion, electricity connection, and social services (LAPSSET, 2016).

Improved Transit Experience, and Growth of Businesses

Kenyans are experiencing a great improvement in road and railway transport.

Commissioned in 2012, the Thika Super-Highway has immensely improved the road transport experience in the Nairobi Metropolitan area. The impact of this national facility has been augmented by construction of thousands of miles of linking roads to connect major cities to one another and to previously hard to access areas.

The southern agricultural hub of the Rift-Valley and the Kenyan Highlands have been linked by new roads. More businesses have flourished along the roads stretching between Nairobi and Busia, and Nairobi and Namanga. The China EXIM Bank funded SGR completes the loop by providing a reliable railway service from Nairobi to Mombasa, further opening up the country for business (Farooq, et al., 2018). This type of disruptive development has revolutionized the way business is done in the region.

The Phase 1 of SGR was commissioned for use in May 2017 while phase 2A which extended the SGR to an inland container deport in Naivasha was commissioned in 2019. The Kenyan coast is a popular point of entry. As an added advantage to businesses, consignees utilising the inland depot enjoy about 570 km reduction in transit distance, an advantage that has ignited a rising demand for freight haulage (Sanga, 2020).

Local experts and business analysts have expressed optimism over the plans to extend the SGR to Malaba and into Uganda. The experts remark that this is a step in the right direction, and one that will put Kenya at the top of business as a frontier in regional transport infrastructure development. In an interview with Mr George Okoth, who is the director of the Institute of Logistics and Transport, he recounted the harrowing experiences of the days when passengers used to spend an entire day to travel from Nairobi to Mombasa using the meter-gauge railway [reference photos appendix 1 and 2].

“I’ve used the railway once, and it was an amazing 5 hours trip. No fatigue, no muscle pain. It’s a great improvement to the 1901 iron-snake. I think SGR has killed the snake!” He said.

In a separate interview with Mrs Rodah Ireri, a senior engineer at Simba Corporation, she could not hide her excitement over the new railway and the proper roads linking towns. However, she hinted at the importance of government being keen on the final product to optimize the cost of quality.

Safety and Timely Delivery of Goods

Old narrow roads have been replaced with efficient multi-lane roads that have reduced travel time and costs [reference photo appendix 3]. This efficiency is a remarkable plus to businesses. The Bus Rapid Transport project which is underway will utilize the TSH to minimize congestion in the city. At the celebration of the SGR maiden trip to Mombasa, the visiting head of state, President Yoweri Museveni of Uganda remarked that the railway significantly cuts the delivery time to Nairobi and by extension into Uganda (Capital Business, 2020).

This system is also reliable as the trains operate on fixed schedules and no delays have been reported since commencement of service. Local traders can now move their products to the market with ease. Moreover, the railway system has enhanced passenger safety, reducing both traffic menace and road maintenance cost. Cargo pilferage and theft is another major concern that has been squarely addressed by railway.

Reduction in transport costs

The old infrastructure cost East Africa based businesses a total of two fifths of the acquisition value of imports in transport costs. The SGR cargo service was designed to handle 22 million tonnes a year. A typical SGR freight train can haul 216 containers, equivalent to 108 transit trucks on road. By leveraging the economies of scale introduced by this new system, the cost of transport of goods within the East African region has dropped.

At the 14th Northern Corridor Integration Projects (NCIP) communiqué held in Nairobi on 26th June 2018, President Paul Kagame of Rwanda encouraged the regional leaders to forge stronger partnerships so that the citizens of the Great Lakes Region could benefit from the development projects (Mwai, 2018). The ultimate goal is to connect Mombasa to Kigali, the Rwandan capital via Uganda which will lead to a 15 – 20% reduction in logistics cost (Niyonsenga, et al., 2018).

Improved Custom Services

The government has been keen to uplift the customs services by constructing new ports and expanding the Mombasa ports. The Kenya Ports Authority constantly upgrades the port technology in an attempt to achieve 48 hours turnaround time for large vessels. To ease the terrific traffic at the port the agency acquired several Ship to Shore (STS) and Rubber Tyred Gantry (RTG) cranes (Kenya Ports Authority, 2018). A large percentage of cargo is moved by rail. At the launch of the freight services President Uhuru Kenyatta remarked that the SGR was a world-class railway built at the right time and within budget. He lauded Kenyans for embracing the SGR citing enhancement of businesses by the system.

Creation of Jobs and Urbanisation

Emerging opportunities have led to expansion of the job market for citizens bearing diverse professional and casual skills. Residents of areas along construction routes directly benefit from the projects by form of employment at the construction sites. Land value has risen in adjacent settlements and the economic activities of these areas have been reinvigorated. Investment has increased in the fields of catering, apparel, entertainment, water supply, real estate, construction industry and energy supply, among others. Stop centres along the TSH such as Ruiru and Roysambu have seen an exponential rise in demand for housing and other amenities due to the increased population [reference photo appendix 4].

Industrial growth

There is an increased demand for goods and services especially in the urbanizing areas. The market based economy has been boosted by the increased purchasing power of the small traders, a result that has facilitated the pivotal sectors of the Kenyan economy which include agriculture and related sectors, tourism, and manufacturing.

Domestic and foreign tourism

Kenya has positioned itself as a destination of choice for tourists from all over the world. The Kenyan coast in particular is a favourite destination for many tourists. The SGR has the advantages of being safe, fast, reliable and a cheaper means of transport, and is now a favourite choice, especially for domestic tourists. In the first 17 months into business, the Kenya Railways Corporation reported that it had surpassed its target by recording 2 million successful passenger travels (Omusula, 2018). The coastal hospitality industry enjoys a large clientele base over the Easter and December holidays. Coastal hotels recorded over 80% bookings in December 2018 and similar numbers in 2019 (Voyages Afriq, 2018).

This merry was disrupted shortly after the Christmas of 2019 by the COVID-19 pandemic that led to near zero tourism activities. Most coastal hotels were shutdown during the Easter holidays of 2020. The tourism industry was ravaged by the pandemic but the industry is slowly making a coming back following resumption of travels in July.

Despite of the many goodies tied to these projects, they occasionally attract setbacks due to high cost of setting up, environmental concerns, displacement of residents from the routes, legal constraints and compensation disputes among other emerging concerns. Nevertheless, the country is on the right infrastructural developmental track and if things go as planned, Kenya will soon rank top in the list of rapidly modernized African states.