IMF chief tips EAC to invest in transport and logistics sector

IMF managing director Christine Lagarde (left) with Kenya's Treasury Cabinet Secretary Henry Rotich at the Treasury Building in Nairobi January 2, 2014. Photo/Billy Mutai   Nation Media Group

By STEVE MBOGO Special Correspondent

In Summary

• Transport infrastructure formed the core of the transnational projects initiated by the some East African Community member countries in 2013, as each member state focuses on improving home transport system to increase business competitiveness.

 

 

The transport sector is tipped to be one of the key drivers of East Africa’s economies this year, thanks to the planned and ongoing construction and expansion of infrastructure projects.

Transport infrastructure formed the core of the transnational projects initiated by the some East African Community member countries in 2013, as each member state focuses on improving home transport system to increase business competitiveness.

The International Monetary Fund (IMF) Managing Director Christine Lagarde who recently visited Kenya singled out transport infrastructure as among the areas the region should focus on in the medium term before embarking on the ambitious Monetary Union.

READ: IMF boss cautions East Africa on monetary union

Audit and consulting firm PriceWaterhouse Coopers (PwC) in a report released this week, also singled out transport and logistics as the industry to watch, as regional economies seek to grow trade, and ease dependence on external assistance.

PwC released a report titled; Africa gearing up: Future prospects in Africa for the transportation & logistics industry, states that there is a new understanding in Africa that to attract investors and facilitate growth of business even for the locals, transport and logistics industry must be well developed, and fast.

“Africa probably isn’t the best destination for companies just looking for quick revenue boosts. The continent needs better transport infrastructure, more connectivity across borders and an improved business environment to reach its potential,” noted the report.

The report says bringing infrastructure up in countries like Kenya to the level of the region’s middle income countries like Egypt and Nigeria could boost annual growth by more than three percentage points.

This perhaps explains why Kenya, Uganda and Rwanda last year jointly launched key infrastructure projects to speed up movement of goods across the region.

Last year, the three countries launched a $13.8 billion standard gauge railway line that will run from Kenya to Rwanda through Uganda after commissioning expansion of Mombasa port.

An EAC intergovernmental study released last year estimated that it would cost the member states $3.4 billion over the next four years to finance 43 critical infrastructure projects to bridge the gap.

READ: EAC sets its calendar for 2014 projects, policies

The study cited projects such as the construction of new container termini at both Dar es Salaam and Mombasa ports and improving the two main transport corridors (Northern and Southern) that link the region, as the priority areas governments are focusing on.

Anthony Hughes, senior ports adviser at Trademark East Africa said the region should focus on integrating its transport infrastructure to improve smoother movement of goods and people as well as investing in equipment.

“The expansion of the ports is not entirely the answer, but investments in port equipment and automation to make them more efficient because efficiency is what has been lacking,” he said.