Kenya to invest in infrastructure
NAIROBI, June 23 (Reuters) – A World Bank economist urged the Kenyan government on Monday to develop the country’s poor infrastructure, particularly power generating capacity, to attract more investment.
Giuseppe Iarossi said a competitiveness assessment carried out last year by the bank showed the biggest indirect cost to firms operating in Kenya was from disruptions to power supply.
“Electricity remains the main challenge … the losses associated with power interruptions in Kenya is relatively high at around 8 percent,” Iarossi told reporters in Nairobi.
Transport was the other main infrastructure issue hurting businesses in east Africa’s biggest economy, he said.
Like other African countries, Kenya is facing rapidly growing demand for power as economic activity increases.
Kenya’s economy grew 7 percent last year, compared to 6.4 percent in 2006. But it is expected to nearly halve to about 4 percent this year due to the aftermath of January’s post-election crisis and high inflation.
Iarossi said that additional investment — and the participation of the private sector — in the generation and transmission of electricity would minimise disruptions.
“This has been done in a number of countries and it can be done in Kenya as well. It will boost the level and quality of the infrastructure in the country,” he said.
The Kenya Electricity Generating Company, which produces about 80 percent of Kenya’s electricity, plans to develop geothermal capacity to meet the growing demand.
The World Bank report found the country had improved its competitiveness by doubling overall productivity. But firms surveyed complained of high taxes, corruption and inadequate security, among other challenges.
Finance Minister Amos Kimunya agreed with the findings: “We are keenly aware that much more remains to be done to deepen reforms if we are to become globally competitive,” he said.
Kenya emerged among the top 10 reformers in a separate World Bankreport, which ranks countries by ease of doing business, due to an ambitious licensing reform programme.
Some 315 business licences have been eliminated and another 379 made simpler to acquire, the minister said.