Kenya Budget: Infrastructure To Help Drive Recovery

The private sector is expected to play a bigger role in delivering infrastructure.

By Liz Bains on
20th June 2023

Kenya has prioritised investment in infrastructure as an enabler of economic recovery and employment creation in its 2023/4 budget.

The budget is the first prepared under President William Ruto and is intended to help deliver his Bottom-Up Economic Transformation Agenda.

The government says it will continue to invest in roads, railways, ports and airports in the year ahead, and has singled out Konza Technopolis City for fast-track development, as well making allocations to improve the availability of energy and water and tackle the country’s housing crisis. 

The private sector is expected to play an increased role in delivering nationally significant infrastructure, with plans to mobilise an estimated Ksh100 billion (US$713 million) in private sector capital across a variety of sectors.

Turning to specific sectors, the budget includes the following allocations for transport and logistics infrastructure:
•    Ksh244.9 billion to support the construction, rehabilitation and maintenance of roads and bridges
•    Ksh37.4 billion for the standard gauge railway
•    Ksh579 million for the rehabilitation of locomotives
•    Ksh889 million for the development of Nairobi Railway City
•    Ksh1.1 billion for the Nairobi bus rapid transport project
•    Ksh300 million for the acquisition of ferries for Lake Victoria
•    Ksh727 million for the construction and expansion of airports and airstrips
•    Ksh2.6 million for infrastructure development in Dongo Kundu Special Economic Zone.

For energy and water infrastructure projects:
•    Ksh33.8 billion for the national grid system
•    Ksh12.1 billion for rural electrification
•    Ksh11.4 billion for the development of geothermal energy
•    Ksh3.2 billion for alternative energy technologies
•    Ksh43.3 billion for water and sewerage infrastructure development. 

For social infrastructure projects: 
•    Ksh6.0 billion has been allocated for developing primary and secondary school infrastructure 
•    Ksh1.9 billion for the construction and equipping of technical and vocational education training institutes
•    Ksh1.9 billion for the construction of a cancer centre at Kisii level 5 hospital 
•    Ksh155 million for the establishment of regional cancer centres
•    Ksh2.4 billion for the construction of Kenya National Hospital Burns and Paediatrics Centre
•    Ksh1.1 billion for the renovation of Kenyatta National Hospital

The government says it wants to turn the country’s housing problems into an economic opportunity to create jobs in the construction sector for over 100,000 young people graduating from technical and vocational education and training colleges every year. 

The plan is to deliver 250,000 houses each year and enable access to affordable housing mortgages.

As such, the budget includes:
•    Ksh3.2 billion for the construction of affordable housing units
•    Ksh3.3 billion for the construction of social housing units. 

Other key allocations to the Housing, Urban Development and Public Works sector include:
•    Ksh5.5 billion for the Informal Settlement Improvement Project Phase II
•    Ksh5.2 billion for the construction of markets
•    Ksh1.1 billion for the construction of housing units for the national police and Kenya prison
•    Ksh150 million for the construction of footbridges.

The government is keen to fast track the development of Konza Technopolis City and made the following budget allocations for the project:
•    Ksh4.8 billion for the Horizontal Infrastructure Phase I
•    Ksh1.2 billion for the Konza Data Centre and Smart City Facilities
•    Ksh475 million for the construction of Konza Complex Phase 1b
•    Ksh5.7 billion for the construction of the Kenya Advanced Institute of Science and Technology at Konza Technopolis City

To support the growth of the manufacturing sector in Kenya, the budget includes the following provisions:
•    Ksh4.7 billion to support the establishment of county integrated agro-industrial parks
•    Ksh3.0 billion for the construction of six export processing zones flagship projects
•    Ksh500 million for the development of SEZ Textile Park Naivasha 
•    Ksh1.8 billion for the construction of an effluent treatment plant at Kenanie.

The budget speech, delivered on 15 June by Njuguna Ndung’u, cabinet secretary for the National Treasury and economic planning, set out the government’s ambitions to engage the private sector in project delivery through its recently strengthened public-private partnerships (PPP) framework.

To ensure the sustainability of PPP projects, a Project Facilitation Fund (PFF) has been launched. Ndung’u said the fund will support project preparation, provide viability gap funding to projects as well as being a source of liquidity to meet fiscal commitments and contingent liabilities that may arise from PPP projects.

He said that over the past year, urban road PPPs and two renewable energy PPPs with a combined capacity of 70MW had achieved financial close thanks to the fund.

Several food security projects and bulk water supply schemes have been approved for development as PPPs. A water purchase agreement model has also been approved with the Ministry of Water and Sanitation to support the development of private projects.

Ndung’u said the National Treasury plans to mobilise an estimated Ksh100 billion in private capital through various priority sectors to deliver nationally significant infrastructure. 

The sectors include airports, seaports, blue economy, water, agriculture, industry in special economic zones, and energy including transmission lines. The inclusion of local goods, works and services will be emphasised for each project to contribute to overall economic growth. 

Ndung’u added that the National Treasury will be holding a series of roundtables to build local capacity in the financial sector in order to boost local financing of PPP projects.

Kenya’s 2023/4 budget aims to raise revenue of Ksh2.9 trillion, while total expenditure is projected at Ksh3.7 trillion. The expenditure breaks down as Ksh2.5 trillion of recurrent expenditure and Ksh713.3 billion of development expenditure.

Photo: Kenya budget day presentation (Source: Kenya National Treasury Twitter @KeTreasury) 

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