President Mwai Kibaki has called for the strengthening of regional capital markets in order to boost their capacity to generate funds towards the implementation of transport and energy infrastructure projects.
Kibaki said tapping into domestic savings would reduce the perennial over-reliance on external borrowing and grants for infrastructure financing.
He noted that development of transport and energy infrastructure is a gradual process, which requires huge sums of money, and hence there is great need to diversify sources of funding, methods of ownership and management of infrastructure assets.
“One of the ways of raising funds that we have not fully exploited is the development of national and regional financial instruments. We need to move fast to further strengthen our capital markets to enable them develop products such as infrastructure bonds and municipal bonds,” he said.
Kibaki was speaking during the official opening of the COMESA-EAC-SADC tripartite and IGAD Infrastructure Investment Conference in Nairobi on Wednesday.
The two-day conference seeks to focus on the development of infrastructure in transport and energy along corridors serving the Eastern and Horn of Africa regions.
The corridors serve 11 countries with a combined population of 280 million people and gross domestic product (GDP) of US$150 billion.
Kibaki said this region has one of the lowest per capita in energy production and consumption whereas it is endowed with huge potential in terms of hydro, geothermal, gas, coal and wind.
“As a region our installed power generation capacity is inadequate to meet our needs for economic transformation of our countries,” he said.
He said creation of industrial states is a matter of necessity for the purpose of eradicating poverty.
Kibaki emphasized the need to collectively invest in generation capacity and build power grid interconnectors in order to facilitate trade in power from surplus to deficit regions.
He said there were a number of projects already in the pipeline to increase power generation capacity and to build regional interconnectors through the Eastern Africa Power Pool and the Southern Africa Power Pool.
Kibaki said Kenya’s development of the Lamu-South Sudan-Ethiopia Transport (LAPPSET) corridor is at advanced stages.
He said the country’s economic and transport corridor would open up vast parts of Kenya and stimulate economic and social development.
He said the project would also create vital links with Ethiopia and Southern Sudan thereby increasing trade and investment.
“Our common experience over the years has been the decline in the railway sector as the primary mode of transport for long distance of freight and passengers. This is despite the fact that railways are the most cost effective mode of transport over long distances,” he said.
Kibaki attributed the main cause of the decline in railways transport to lack of investment in track maintenance, upgrading and deferred or poor maintenance.
He said Kenya and Uganda governments have put in place measures to revamp the Kenya-UgandaRailway line.
By James Anyanzwa, The Standard
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