Kenya set to become hub for intra-regional trade in Africa

Kenya is expected to benefit from massive infrastructure projects being implemented across the country and thus become a hub for intra-regional trade in Africa, a new study by research firm revealed Saturday.

The study by Frost & Sullivan said mega infrastructure projects are planned for East Africa and are set to create unique opportunities and open new markets in Kenya, Uganda and Ethiopia.

"Transport infrastructure has undergone major upgrades over the past 5 years in order to support the high trade demand in the East African region," said Frost & Sullivan Senior Economic Consultant Craig Parker in the study.

Kenya is implementing several infrastructure projects including the construction of the first phase of the Standard Gauge Railway linking Mombasa and Nairobi.

The project is expected to result in both shorter freight delivery time and lower transportation costs, boosting regional trade.

The East African nation is also a major beneficiary of Chinese funded infrastructure projects like superhighways, railway network and seaports.

The East Africa's largest economy has a cordial relationship with China whose benefits are being felt across socio-economic spheres.

Chinese investments in Kenya's infrastructure, manufacturing and mining sectors had ripple effects in the eastern African region.

The study, African Infrastructure Tracker: Kenya, reveals that an estimated 55.6 billion U.S. dollars in investment into infrastructure development for Kenya is planned (as of 2015), the majority of which will focus on telecommunications and power generation infrastructure.

"The Nairobi Southern bypass, for example, was commissioned in 2012 and is already 40 percent complete," Parker said.

The report notes that major road projects that are currently underway were established to alleviate the severe bottlenecks and traffic congestion.

According to the report, an estimated 5.14 billion dollars has been dedicated to road project investment in Kenya.

According to the study, legislative changes to the tendering process in Kenya have placed limitations on the type of projects international firms can get involved in.

In order to address these challenges, and be accepted for infrastructure project tenders, global firms will be required to form local partnerships or joint ventures with domestic firms, the study notes.

"Although private participation in infrastructure development is growing and tender processes are becoming more transparent, forging local partnerships will remain crucial for entering the Kenyan market successfully," Parker said.

"This explains the emergence of high priority public-private partnership programs, which boost the prospects of local construction companies and financial institutions that can offer finance to companies," he added.

According to Parker, industry sectors expected to benefit from the planned infrastructure developments include oil and gas (O&G), mining, agriculture, and retail.

The African Development Bank said last year that recent discoveries of oil, gas and coal could help propel Kenya to "middle-income country status in the medium term".