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Infrastructure and Economic Development in Kenya

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This is a PowerPoint document prepared by a group of 9 students where we were looking at the infrastructural development in Kenya and the economic value and nature of the infrastructure.

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Infrastructure and Economic Development in Kenya

  1. 1. INFRASTRUCTURE AND ECONOMIC DEVELOPMENT IN KENYA  Prepared and presented by group 9
  2. 2. Infrastructure consists of the following: 1. Transport 2. Telecommunication (Information and Communication Technology ICT) 3. Water supply and sanitation 4. Energy etc… INTRODUCTION  This topic reviews the linkages between infrastructure and economic development.  The main component is that economic growth arises from investment in infrastructure.  Policy makers use infrastructure as a tool to realize economic benefits.  The quality of infrastructure and the level of investment in physical infrastructure has a direct correlation with the level of economic growth.  Intensive investment in physical infrastructure translates to higher economic benefits e.g. application of modern technology in manufacturing industry leads to increased productivity of goods and services.
  3. 3. 1.Water supply and sanitation a. Water Supply Water supply and sanitation in Kenya is characterized by low levels of access, particularly in the urban slums and rural areas, as well as poor services and quality in form of intermittent water supply.  The development of infrastructure has therefore led to increase in distribution of water to various places in different regions.  Through the water Act No. 8 the water sector is undergoing various reforms contrary to previous years where it was the responsibility of a single company: The National Water Conservation and Pipeline Corporation, and a few local utilities established since 1996.  After enacting the Act service provision was gradually decentralized to 117 Water Service Providers (WSPs).
  4. 4. a. Water supply (Continued…) Today water is distributed to many regions all over the country for various uses due to improvement in pipeline services i.e. for domestic purposes, irrigation in farms, in industries and factories etc…  According to Joint Monitoring Programme for Water Supply and Sanitation (JMP) estimates, access to improved water sources in urban and rural areas have increased by 20%.
  5. 5. b. Sanitation Countrywide estimates for 2008 by the Joint Monitoring Programme for water supply and sanitation (JMP) indicated that 31% (27% of urban and 32% of rural) Kenyans had access to private improved sanitation (This includes flush, pour flush toilets connected to a piped system, septic tanks, VIP latrines and pit latrines).  In Nairobi, sanitation coverage was about 23% in 2006 – 2007.  The Kenyan integrated household Budget Survey later reported a much higher sanitation improvement by 84%.
  6. 6. 2. Transport Economic infrastructure is vital for economic growth and poverty reduction since it plays a key role in enhancing competitiveness thereby facilitating trade and integrating countries to the rest of the world. This involves roads, railway, air transport and seaports.
  7. 7. a. Roads Road infrastructure provides basic national and regional connectivity to major towns and country capital in the interior opening up unconnected regions to trade and investments like companies and estate apartments.  Road transport improves access to goods and services delivery, reducing loss of goods in terms of damage, increased productivity and time performance through access to input of raw materials and finished products due to reduction in congestion on roads because of construction of bypass like the Northern Bypass, Eastern Bypass and the Southern Bypass.  Road transport has also provided employment opportunities hence increased per capita income.
  8. 8. a. Roads (Continued…)  Investment in road infrastructure has led to sustainable growth and development of the economy which arises due to the multiplier effects of government spending on infrastructure  Improved road transport therefore shows a positive impact on economic growth.  Transport infrastructure has undergone major upgrades over the past 5 years in order to support the high trade demand in the East African region. The Nairobi Southern bypass, for example, was commissioned in 2012 and is already 40% complete.
  9. 9. b. Railway “Most rail networks in Kenya are as old as 100 years and have not been upgraded since they were first constructed in colonial days due to lack of funds. These networks cannot meet the demands of modern times, observes the African Development Bank (AfDB). Most lines are low-speed, small-scale, undercapitalized networks carrying low axle loads.”  Kenya’s railway corridor is of strategic importance to the region linking the port of Mombasa to Nairobi and going to Uganda and Rwanda.  The standard gauge railway (SGR) which is 609km is expected to raise Kenya's GDP by 1.5% on its completion by 2018.  The SGR will facilitate movement of bulky goods easing pressure on congestion in roads, speed up industrialization through cheaper transport and establishment of new service industries.  Railway development promotes opening up of most areas and more so creating employment to the jobless population.
  10. 10. b. Railway (Continued…) “Kenya’s standard gauge railway (SGR), a new rail track that will stretch from Mombasa to Nairobi, is the most ambitious infrastructure project in the country since independence. The 609km-long line is expected to cost $3.6- billion, with China’s Exim Bank footing 90% of the bill and the Kenyan government providing the other 10%.” - The SGR is part of the grand trans East African railway project, one of many ‘mega’ infrastructure projects currently under way in that region. - It is a direct effort to connect East Africans and their economies, and in so doing:  build economies of scale,  lower the cost of doing business,  attract foreign investment, and  ultimately accelerate growth and development. - The SGR, which should be completed by 2017, is the first part of the broader Lamu Port-South Sudan-Ethiopia transport corridor. This integrated mega-project will connect countries in the region via oil refineries, ports and railway lines.
  11. 11. c.Air Transport In a bid to cement its position as one of Africa’s major gateways, Kenya is building a new terminal at Jomo Kenyatta International Airport in Nairobi. Dubbed the ‘Greenfield Terminal’, and financed largely by the African Development Bank, the terminal will cost an estimated $612-million, span 178,000 square meters and handle an annual 20-million passengers.  Kenya is investing in air transport to improve economic development of the country through the Greenfield Terminal.  A successful public-private partnership in air transport has helped to make the country’s airline one of the top three carriers in the Sub-Saharan Africa.  JKIA is one of the key international gateways into the continent widening the market for most Kenya's export products and tourists.  Air transport is a means of linking Kenya to the international destinations thereby increasing economic development of Kenya.  In addition to this, in 2013 Kenya signed a financing agreement with the French Development Agency to upgrade Moi International Airport in Mombasa. This is a major entry point for tourists visiting the coastal city, with more than a dozen airlines flying in directly from Europe.
  12. 12. d. Seaports Kenya is endowed with seaports such as the ports of Lamu, Mombasa, and Malindi which open international markets facilitating exports and imports of products enhancing trading activities. This generates government revenue through custom duties levied on imported goods enabling the country to provide essential goods and services (Public Utilities).  Inland transport like that of Kisumu enables regional corporation opening economic development in the East African Countries.
  13. 13. e. Energy Energy is a foundation stone of the modern industrial economy. Energy provides an essential ingredient for almost all human activities: it provides services for cooking and space/water heating, lighting, health, food production and storage, education, mineral extraction, industrial production and transportation. - There are diverse energy sources some of which include the following:  Hydropower (HEP) e.g. in Masinga dam  Geothermal Power e.g. in Olkaria  Wind energy from wind mills e.g. Ngong Hills  Solar Power using solar panels e.g. in Arid and semi arid lands of North Eastern Kenya  Biomass, and  Biogas. - Energy consumption is important to drive a country’s development process in a number of ways.
  14. 14. e. Energy (Continued…) Modern energy services are a powerful engine of economic and social development, and no country has managed to develop much beyond a subsistence economy without ensuring at least minimum access to energy services for a broad section of its population. Throughout the world, the energy resources available to them and their ability to pay largely determine the way in which people live their lives. Nevertheless, it is critical to recognize that what people want are the services that energy provides, not fuel or electricity per se.  The use of biomass energy has made charcoal a cash crop contributing to a monetized economy, and in some urban areas, there are active markets in local wood fuels.  The concept of energy diversity is responding to uncertainty and this underpins energy security which helps deliver economic performance and improves the quality of life.  Availability of adequate supply of energy helps the industries to reduce production costs of manufactured and processed goods and subsidized service delivery thereby maximizing on production.  Energy diversity provides additional options for substitution on supplies I which a country is over-reliant hence minimize losses on interruption in supply.  Energy production process creates employment opportunity to a larger number of people.  Availability of energy has made it possible to use the locally available resources in the production process like it is in the welding and Jua Kali industries.  Use of energy in the agriculture sector promotes productivity hence a food security policy.  Use of energy in rural Kenya has enhanced rural economic development as rural areas increase output per household
  15. 15. f. Information and Communication Technology (ICT)Since 2000 Kenya's economy has grown at an average of 3.7%. Without ICT this growth would have been at 2.8% and per capita income would have stagnated. Kenya has been ranked among the top 5 African countries with the fastest growth in telecommunication infrastructure in mobile money innovation. The engine behind the rapid growth has been mobile telephony.  In the mobile telephony, mobile money transfer (MPesa) has driven change in the business model of most financial institutions in the country.  Mobile money agents represents 3/4s of the total financial access and they are major drivers in bringing financial access points close to the population.  INFORMATION and communication technology has been recognized as a powerful enabler for economic and social development.  ICT enhances economic growth, social inclusion, increase health and education services and improving governance at all levels.  The United Nations MDGs identifies the potential of ICT for development and MDG target-8 calls to develop a global partnership for development and in corporation with the private sector make available the benefits of new technologies especially in ICT.
  16. 16. f. Information and Communication Technology (ICT) Continued… Mobile Internet access revenue will soar at a 12.7% CAGR, from US$236.83bn in 2014 to US$441.47bn in 2019, accounting for close to two out of every three dollars spent on Internet access in that year. In 2019, Kenya and South Africa will see more than 75% of total Internet access revenue derived from mobile, with South Africa at an industry-leading 90.7%.  The internet has also led to economic development with servers to that have a proxy to e-commerce has interlinked buyers or potential customers to the sellers from all over the world hence facilitating trading activities promoting economic development.  In education sector ICT has enabled more learners to affordably access learning materials at a lower cost. This area has a potential growth boosting online education and facilitating massive and online content.  ICT has become the highest distributor platform of providing public and private services to millions of people in rural and poor areas, market information, financial services and health sectors have largely been unavailable for long.  With the growth of ICT, in particular high speed internet, are changing how large companies are doing business, transforming public service delivery and democratizing innovation.
  17. 17. CONCLUSION While cash is crucial for Kenya’s capital-intensive projects, land disputes and security concerns have provided the most unexpected challenges, particularly at the terminus in Lamu. Infrastructural development is beyond doubt the key aspect of economic development of any nation. There is therefore an urge to forward our infrastructural development level so as to win the myriads of economic benefits in the EAC.  Infrastructure plays a crucial role in the economic development of any nation whether developed or still developing.  Infrastructure provides basic and solid foundation on which the development and growth can be erected.  Obviously if the foundation is weak and fragile, it is doubtful that any structure can be built on it. Super or simple is likely to provide continuous and stable services for the foreseeable future.  Once the infrastructural foundation is strong development is not easily attainable but is also continuous, stable, quantitative and qualitative.