A section of Thika Road which was built by the Chinese. The Asian country’s infrastructure projects in Kenya are trailing Europe in value of deals. FILE
By CHARLES MWANIKI, cmwaniki@ke.nationmedia.com
IN SUMMARY
Emerging Asian giant lags behind Europe in value of deals undertaken.
Chinese infrastructure projects in Kenya are conspicuous but the emerging Asian giant still lags behind Europe in terms of value of deals undertaken, a survey by consulting firm Deloitte has found.
Western development finance institutions (DFIs), the US and Europe account for 41 per cent of funding for large Kenyan projects, while China backed deals are about 17 per cent of total.
According to the Deloitte report released on Wednesday, most Western-backed projects are in the energy sector, which are less visible to the general public.
“The Chinese are strong in rail and port projects, while US and Europeans are funding and building the power projects whose technology largely rests with their firms,” said Deloitte partner for infrastructure and capital projects Mark Smith.
The survey studied 322 infrastructure projects each worth a minimum value of Sh4.3 billion ($50 million) across the continent, although it takes into account only projects that had broken ground by June 2013 and are yet to be commissioned.
The total value of the projects surveyed in Africa stands at Sh27.9 trillion ($222 billion), with the east African projects valued at Sh5.8 trillion ($67.7 billion).
International DFIs lead the funding rankings at 24 per cent, with China financing 17 per cent of projects in the region, after which European and US funding comes into play for 13 per cent of projects.
Africa DFIs are funding 11 per cent of projects, according to the Deloitte survey. Only one per cent of the projects are funded through public-private partnerships, a model that the government of Kenya has earmarked for power generation projects.
European and US construction firms are responsible for building the highest number of projects (37 per cent) while Chinese firms are building 19 per cent of projects under way.
However, the Chinese firms are doing the largest projects, and have recently clinched the contract for Kenya’s biggest infrastructure project of laying a standard gauge railway from Mombasa to Malaba, estimated to cost over $4 billion.
Indian construction firms are also involved in construction of power plant construction, especially in the renewable energy sector.
Of the total projects collected national governments own most of the projects, European and USA companies seem to be doing most of the building and international DFI’s seem to be funding most of the projects followed by the Chinese Ninety-four East African projects were surveyed by Deloitte dominated by transport and power projects.
The industry seeing the most activity is the transport sector, one in which Kenya has poured substantial resources into over the past decade.
The country is also putting in more resources into power generation projects, with the government having launched an ambitious plan to increase power production by 5,000 MW over the next 40 months.
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