Businessmen believe that investment in infrastructure projects by the Jubilee Government has had a spiral effect in different sectors of the economy this year, a report by the Central Bank of Kenya (CBK) has revealed.
CBK’s Report dubbed Monetary Policy Committee Markets Perceptions Survey January 2019 which fields responses of interviewees on the impact of the different infrastructure projects including the Standard Gauge Railway (SGR) conducted in January 2019 reveals that businessmen said that their business operations have reported increased economic activity on account of close proximity to roads, railways or reduction in electricity prices.
The survey was conducted in Nairobi, Nakuru, Kisumu, Eldoret, Nyeri and Meru with the rationale being to get feedback from areas that contribute to 70% of Kenya’s Gross Domestic Product (GDP).
Banks indicated that there was increased lending to support functions/industries in the various projects, increased financing to some Micro, Small and Medium Enterprises (MSMEs).
“The development of road infrastructure has grown asset finance loans as clients seek facilities to carry out the projects, increased local travel making it easier for mobility of resources and factors of production, increased business activity and efficiency in logistics businesses that are linked by the two cities that are served by SGR,” reads the report.
Conversely, business people believe that investment in roads, electricity and railway systems has led to increased export and import activity leading to increased uptake of trade financing, international money transfer services and foreign exchange services.
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The non-banking private sector, including hotels, cited the cheaper and convenient transport and business opportunities availed in the establishment of new industries to serve the new railway, improvement in the tourism sector following improved occupancy levels in the towns served by the SGR, easier freight movement between Mombasa and Nairobi, eased pressure on road transport demand, allowing businesses to leverage and negotiate for better transportation rates and reduction in transportation time taken to move goods.
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However, some respondents reported experiencing some challenges including loss of business for clients involved in cargo containers transit and long distance transporters, and a slight reduction in the number of holiday makers to upcountry hotel
