Uhuru's grand projects: Boon or mere white elephants?

A few years ago, moving from Mlolongo in Machakos County to Kikuyu in Kiambu County was a nightmare.

One had to cut through the Nairobi Central Business District (CBD) and the maddening traffic that was characterised by all kinds of vehicles, including the heavy commercial types weaving through the city’s thick traffic.

When the Southern Bypass was commissioned in 2016, this journey was significantly reduced - decongesting Mombasa Road, Uhuru Highway and Waiyaki Way.

Today, this has further been shortened such that if you can afford to pay to use the Nairobi Expressway, you can move from Mlolongo to Westlands in about 15 minutes and onwards to Kikuyu through the refurbished Waiyaki Way.

While the traffic cutting through the CBD is still chaotic, it is less maddening with many of the road users who have no business in the CBD having the option of using the new roads.

The expressway, the Southern By-pass, the ring roads around Nairobi and a host of other mega infrastructure projects are among the key projects that represent President Uhuru Kenyatta’s legacy when exits the stage after next month’s polls.  

President Kenyatta picked up from where his predecessor, the late former President Mwai Kibaki, left off, pressing on to complete many of the projects that the latter had laid the groundwork for.

He also went a notch higher to conceptualise more and even grander projects that have been implemented during his era.

Besides roads, other major projects completed during President Kenyatta’s reign include the Mombasa-Nairobi Standard Gauge Railway (SGR) and its extension to Naivasha.

The government has also refurbished the metre-gauge railway line, including the line from Longonot to Malaba and Nakuru to Kisumu.

The government has also connected millions of Kenyan households to electricity, increasing the number of customers connected to the power grid to 8.8 million currently from 2.3 million in 2013.

This has been possible through the Last Mile Power project, which has seen Kenya move from among the countries whose citizens had poor access to power to a leader in power access in Africa.

The country has also completed the first three berths of the Lamu Port and constructed the new Mombasa-Nairobi petroleum products pipeline.

Silvester Kasuku, an expert on infrastructure development and the founding chief executive of the Lamu Port-South Sudan-Ethiopia-Transport (Lapsset) Corridor Development Authority (LCDA) termed the Jubilee administration’s tenure as the “infrastructure development decade.”

He notes that it was necessary as the state of infrastructure in the country did not correspond with its growing needs.

“The infrastructure development decade was something that came in at the right time. Already, the stock of infrastructure that we had was dilapidated. The country was also expanding in terms of population and its development needs. Kenya needed some kind of infrastructural upgrade,” said Mr Kasuku, currently the executive director of the African Centre for Transport, Infrastructure and Regional Integration, which advises governments on infrastructure development.

He added that going forward, the country needs to demonstrate that these mega projects are of benefit to the common man, a key concern for many Kenyans who have argued that the mega projects will not put food on their tables.

“Infrastructure is not an end in itself but an enabler for other economic sectors. I believe that where we are now, we should not stop building infrastructure. However, the priority now is how to put that infrastructure to use,” he said.

“We need to support sectors such as manufacturing and agriculture to utilise the infrastructure that has been built to create greater value. If you leave the infrastructure idle, you will be losing its value.”

Mr Kasuku also notes that in successfully having the Nairobi Expressway off the ground and now in use, the government has possibly demonstrated to the private sector that the country is mature for Public-Private Partnerships (PPP). Over the years, the government has sought to tap private capital in developing mega infrastructure projects.

Private sector

It has, however, achieved little success. However, the successful implementation of the Nairobi Expressway – developed through the PPP model – could be a turning point in convincing private sector players to put their expertise and funds into the country’s infrastructure.

The other major project that could also endear the private sector to Kenya’s infrastructure development is the Rironi-Mau Summit Road, which has been contracted to the Rift Valley Highway Company under the PPP model.

Previously, PPPs may have failed to take off owing to a legal framework that had what appeared like winding processes, but amendments to the law in recent years could help in bringing the private sector on board.

Mr Kasuku noted that this would free up government resources to be deployed in service delivery.

It would also reduce the government’s reliance on loans to support the building of mega projects.

“The idea of PPPs has been much talked about, but some of the factors, mostly within the law, hindered investors from coming on board. But now that we have better legislation, we now need to have more private sector-led investments and free up government money for the provision of services to the public,” he said.

“If, for instance, the private sector can take up a few berths at the Port of Mombasa, build them afresh and equip them with better facilities, it could save the government from taking a loan of maybe Sh40 billion that would be required to refurbish them. Once they are revamped and with the private sector operating them, it would mean more ships calling on the port to supply Kenya and the region as well as more jobs for Kenyans and a concession fee for the government that can, in turn, be used for public service delivery… we would be doing much better.”

The ballooning public debt has been a matter of concern for Kenyans over the nine years that President Kenyatta’s regime has pushed for an economy whose growth has been fuelled by infrastructure development.

President Kenyatta’s administration has borrowed over Sh6.5 trillion since it came to power in early 2013, increasing the country’s total debt to Sh8.47 trillion as of April 2022.

Since 2014, the cumulative public debt as a share of Gross Domestic Product (GDP) rose from below 50 per cent in 2014 to 68.1 per cent by June 2021.

The law previously allowed the government to limit its borrowing to 50 per cent of GDP, but this was abandoned in 2020, with the limit set at Sh9 trillion but was revised upwards in June this year to Sh10 trillion.

But the government has always defended its borrowing patterns and noted that the money goes to improving the welfare of Kenyans.

Some of the loans have, however, attracted scandals such as the Arror and Kimwarer dam projects, where over Sh60 billion is reported to have been lost and more recently the Kenya Medical Supplies Authority (Kemsa) scandal in which Sh7.8 billion of borrowed cash remains unaccounted for.

“The only time that debt is a burden to a nation is if the nation is led by a cabal of looters. But in the hands of a visionary administration, debt is a catalyst for rapid development,” said President Kenyatta during the Madaraka Day celebrations last month.

Ken Gichinga, the chief economist at Mentoria Economics, noted that the government needs to explore other ways of financing projects going forward, with debt becoming unsustainable.

“Financing projects through debt is sensitive, and Treasury needs to rethink this going forward. The rate of payments for most projects, including SGR, is usually higher than the revenues or returns from the project,” he said.

“That way, the country ends up struggling with cash generation and loan repayments, and this distorts public finance because money has to be diverted to repay the loans and, in turn, it takes time to get money to the counties or to pay suppliers.”

Smaller roads

Mr Gichinga also noted that the government had heavily focused on the mega projects and to a certain extent neglected smaller roads, dams and other micro-projects that could be more impactful to Kenyans.

He said while mega projects are necessary, they nevertheless should be balanced with the last mile projects that are far much smaller in nature but affect Kenyans on a daily basis.

“If you look at the opinion polls over time, among the top things that Kenyans usually want the government to address are the cost of living and improving infrastructure,” he said.

“This is ironic since the country spends hundreds of billions of shillings in infrastructure development every year but also tells you that the roads leading up to the farm gates have been neglected. This leads to a lot of post-harvest losses because the farmer is unable to get their produce to market. It tells you that even as the country builds the major corridors, it should also balance by ensuring that there are roads to the dairy or tea farms.”

The feeling that many of the projects may not have been felt on the ground is seen in a report by the Kenya Association of Manufacturers (KAM).

The manufacturer’s lobby recently identified what it said are the five key issues that summarise the current state of the Kenya economy.

Among them is the government’s “high spending on infrastructures without commensurate contribution to growth and revenues.”

Other issues of concern to the manufacturers that they pointed out as having resulted in the current state of the economy are the manufacturing sector’s decline in its share of contribution to the GDP, debt-driven economic growth, elevated levels of fiscal distress and rise in the cost of living.

Additionally, the government in its ambitions may have embarked on too many projects and, in turn, seems to have bitten off more than it can chew. There are concerns that some of the projects might be left half done, while others might not serve any meaningful purpose and end up being white elephants.

According to the Parliamentary Budget Office (PBO), the government is implementing nearly 4,500 projects that would require Sh5.3 trillion to complete, pointing to a scenario where many of these projects might be a strain in the coming years.

“Currently, the National Government is implementing over 4,477 projects across various MDAs (Ministries, Departments and Agencies).

The bulk of these projects is in the infrastructure sector. As of June 30, 2022, it is estimated that the total outstanding resource requirement for completion of these projects will be at least Sh5.3 trillion,” PBO noted in its May 2022 report.

“The planned development resources for the 2022/23 financial year to 2024/25 financial year are equal to Sh2.77 trillion, assuming that no new projects will be introduced in the period. This, therefore, means that over the medium-term, some projects may not be completed as prescribed.”

It noted: “In addition, despite the National Treasury having provided a list of projects to be undertaken in the 2022/23 financial year and the medium term, a review of the status of implementation has not been provided. There is no status report indicating projects that are either stalled or completely abandoned. As such, the rate of completion of capital projects cannot be ascertained. This makes it difficult to justify the value for money in the development budget allocation.”