EA budgets focus on road, railways and power projects

Infrastructure development is the key highlight in this year’s national budgets for East African Community partner states.

A big chunk of the governments’ money has been allocated to construction of roads, railways, an oil pipeline, harmonisation of axle load controls and service automation at border points.

Most of the countries’ outlays are expected to support ongoing infrastructure development in roads, standard gauge railway, ports, energy and security. A part of this development budget will be funded by project loans and grants from development partners, while the balance will be financed from domestic resources.

However, as per the budgets, the African Development Bank, the World Bank and the European Union are financing most infrastructure projects with a regional dimension.

The East African countries have been negotiating with the development partners as well as individual countries, particularly China and India, in efforts to raise the required resources.

The regional infrastructure projects are expected to cost at least $100 billion in the 2015/2016 financial year.

Uganda has a budgetary allocation of Ush101 billion ($32.5 million) for power projects; Ush35 billion ($11.3 million) for the acquisition of land for construction of the oil refinery and Ush4.5 billion ($1.45 million) for the Kampala-Kigali standard gauge railway line.

Uganda will also invest heavily in scaling up oil and gas exploration and production, build petroleum infrastructure and the related pipelines for distribution, operations and management, development of an oil refinery and the development and implementation of a communications strategy for the oil and gas industry in the country.

Kenya has allocated Ksh118.1 billion ($1.2 billion) for the standard gauge railway, Ksh25.7 billion ($260.6 million) for the Railway Development Levy Fund (for SGR),  Ksh 1.3 billion ($13.2 million) for ports, and Ksh21.1 billion ($213.9million) for geothermal power development.

According to Kenya’s Treasury Cabinet Secretary Henry Rotich, the country has a huge infrastructure deficit.

“Kenya is keen to tap the private sector to bridge the infrastructure financing deficit,” said Mr Rotich.

Kenya’s annual infrastructure budgetary deficit currently stands at around $2 billion.

Rwanda has indicated it will increase levy taxes on fuel for the Road Maintenance Fund to cater for the regional infrastructure projects. The Ministry of Finance has introduced a Rwf5.2 billion ($7.4 million) levy on fuel, infrastructure levy on imports of Rwf10.6 billion ($15.1million) and Rwf8.6 billion ($12.3million) for strategic oil reserves to help finance the key infrastructure projects.

“The AfDB and the Arab funds will be used mainly for infrastructure projects in the energy and road sectors,” says Rwanda’s Finance Ministry.

The donors have also pledged to finance the regional infrastructure projects.

The  World Bank has pledged a $1.2 billion fund towards infrastructure development and improved competitiveness in the EAC region, while Trademark East Africa pledged $350 million to support regional infrastructure for ports, one-stop border points and road connectivity.

TradeMark East Africa Kenya country director Chris Kiptoo said the ultimate objective is to minimise delays in the movement of goods and people across the region.

He said that EAC countries need to prepare policies needed for the region’s extractive boom and to invest in regional intermodal transport infrastructure.

Under the Northern Corridor infrastructure projects, the partner states (Uganda, Rwanda, Kenya and South Sudan) have focused on infrastructure development, elimination of NTBs, and strengthening the Regional Commodities Exchange.

Uganda is consolidating its efforts, though, in strengthening its own Commodities Exchange before championing the Regional Exchange.

The priority will be on fast-tracking the already ongoing process of developing the Standard Gauge Railway network to run from Mombasa to Kigali, with a spur to South Sudan.

Tanzania and Burundi have a bilateral arrangement to construct a 200-kilometre standard gauge railway between Uvinza in Tanzania and Musongati in Burundi, estimated to cost $550 million.