What could 2019 deliver for road infrastructure?
It has been estimated that $78 billion is required by countries in the East African Community to finance mega infrastructure projects. This includes the construction of two major transnational roads funded by the African Development Bank - the $322 million Rumonge-Gitaz and Kabingo-Kasulu-Manyovu road-upgrading project and the Malindi-Mombasa-Lunga Lunga/Horohoro-Tanga-Bagamoyo highway (Kenya to Tanzania). This 460km highway is budgeted to cost $751.3 million, with 70% borrowed from the AfDB, and each country funding 30% of the work in its territory. The governments of various East African countries have continued to prioritise infrastructure development into 2019 in recognition of the role that infrastructure plays as a cornerstone of economic development and prosperity.
It is anticipated that Uganda will select a company to build a new major road between Kampala, and Jinja by the end of year. The 95km road, believed to cost in the region of $1 billion, will by partly funded by the Ugandan government and partly by the contractor. Companies that have submitted bids for the project include Strabag (Germany) and Communications Construction Company (China).
The East Africa Regional Integration Strategy Paper (RISP), approved in 2018, could provide up to $3 billion in funding for a variety of regional integration and joint infrastructure projects, including transport connectivity, energy infrastructure, ICT connectivity, and management of transboundary water resources. The Strategy Paper was developed in consultation with regional economic communities and is aligned with key REC strategies for the EAC, the Common Market for Eastern and Southern Africa (Comesa) and the Inter Governmental Agency on Development (Igad). “The key objectives of this four-year strategy are fast-tracking structural transformation, increasing trade and promoting financial sector integration and inclusion,” said Nnenna Nwabufo, AfDB deputy director general for East Africa.
Not all smooth sailing
Despite economic growth predicted to remain fairly stable, the year ahead is not likely to be without its hurdles. Weakening regional currencies, decreasing private sector involvement, public expenditure pressures and growing public debt will mean that stakeholders need to keep a sharp eye on the region and global markets while managing public spending and debt.
The raising of interest rates in the United States has impacted investment into developing regions globally as US markets show higher returns for investors. Capital flows have been redirected to US markets while also leading to currency depreciation across the developing world.
The ability of countries to effectively manage public sector spending and debt, and work with both regional, multi-lateral and international stakeholders will be a key factor in determining the success of their infrastructure projects in the year ahead.
The 2019 Africa Road Infrastructure and Investment Congress (ARIIC) will bring together the key financiers, regulators, public and private sector stakeholders to discuss how these various elements fit together and how to successful fund and execute infrastructure projects on time and within budget. Visit ARIIC 2019 for more information.