Three criteria often cited as being key criteria in the pursuit of sustainable economic growth and social development include adequate infrastructure, macroeconomic stability and an articulate and achievable development strategy. Despite the equal importance of the three criteria noted, our focus today shall be infrastructure. The importance of infrastructure development to achieving economic posterity is a topic well canvassed. Indeed, it is commonly noted that infrastructure development is a foundation on which to build an economy.

Efficient infrastructure supports economic growth, improves the quality of life, and is necessary for national security. Zeroing in to quality of life, numerous studies point at there being a direct correlation between investment in public infrastructure and quality of life. These include investments in transportation, power and communication facilities and social infrastructures to name a few.

In acknowledgement of the necessity of quality infrastructure to the achievement of economic advancement, the East African region has pointed out infrastructure development as a key tool for regional development. As a step toward the achievement of this, East African Community (EAC) leaders, in the recently concluded retreat on infrastructure development and health financing and development, pledged to invest $78 billion (Sh7.9 trillion) on infrastructure development over the next ten years. This will be utilised to fund over 200 capital intensive projects, such as the Standard Gauge Railway, renewable energy and various oil and gas projects in the region.

As evident from the price tag of $78 billion, infrastructure projects are highly capital intensive. Often times, these are financed by external and domestic debt, as well as internally generated revenue. However, with the ever increasing costs associated with large-scale infrastructure projects, it is becoming increasingly necessary for governments to seek creative and efficient ways to fund these projects. In recent years, this has led to an uptick of Public Private Partnerships. Through private sector investment, private sector funds may supplement the national budget in a bid toward achieving efficient infrastructure. Additionally, well utilised PPPs may result in a transfer of technology and management know-how as between public and private sector players.

In order to ensure that infrastructure targets are met, it is necessary for maintain fiscal responsibility. Measures include improving administration and management efficiency with regards to public infrastructure projects. This would reduce budget overruns that have been known to be a major barrier in infrastructure development. Ultimately, the freed up can be pumped into over viable projects. Additionally, a widening and deepening of the tax base will insure a boost in internally generated revenue, which can be diverted to growth promoting investments.

Should the continual focus on infrastructure development be maintained, with the proposed projects efficiently and prudently managed, it is expected that the EAC economy will be catapulted forward.

Source: The Star

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