Despite strong growth indicators, Kenya's infrastructure sector still faces significant obstacles in 2012. Improving domestic economic conditions are forecast to send inflation lower over the course of the year thanks to tight monetary policy, but the rising cost of building materials and bank loans is set to impede demand for new developments. The industry nonetheless looks relatively robust, thanks to a year-on-year real growth forecast of 8.3%, bringing construction industry value to US$1.9bn for 2012.
Key developments in the sector include:
- Chinese oil and gas company Sinopec International Petroleum Company has been awarded a US$140mn contract to install steam pipelines and control systems at two Kenyan geothermal power plants. The pipelines will transport steam from geothermal wells to Kenyan power company KenGen's Olkaria I and Olkaria IV facilities in the Rift Valley. The power plants will be fully operational by mid-2014.
- The International Finance Corporation (IFC) announced plans to make a maximum investment of US$3.5bn in Sub-Saharan Africa in 2012, primarily in the infrastructure sector. IFC has planned to direct up to US$600mn towards four projects, including the Kenya-Uganda railway and three power projects in Kenya. US$100mn is expected to be disbursed as a loan to Kenya's Equity Bank in order to increase lending to small- and medium-sized enterprises.
- The African Development Bank has announced that it will provide a US$186.7mn loan to Kenya for the construction of the Turbi-Moyale section of the Mombasa-Nairobi-Addis Ababa Road Corridor Project, reports roadtraffic-technology.com. The loan will finance the final phase of the project, which involves the construction of a 320km bitumen road, including the 122km Turbi- Moyale section in Kenya.
Kenya faces many obstacles in its quest to become a mature post-ethnic democracy, with the country seeing a proliferation of violence following the disputed election of 2007. Kenya's High Court has ruled that elections will take place in March 2013 instead of August 2012, unless the coalition government collapses before then. Domestic developments in the run up to the 2013 elections will continue to dominate the agenda at the expense of regional and international issues, and will be fundamental to setting the country's future direction.
Although the Kenyan economy faces a great deal of uncertainty in 2012, we forecast that growth will come in at 4.9% - higher than the 4.1% growth estimated for 2011. Improving domestic economic conditions and the robustness of regional trade partners underpin this expectation. The most salient threat to our outlook comes from the weather, although elections and a worse-than-expected fallout from the eurozone debt crisis also present risks.
The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.
Click for Report details:Kenya Infrastructure Report Q3 2012
