Infrastructure development is a key consideration in the development process. It drives enterprise development in all sectors of the economy. In developing economies, roads, water and electricity form the bulk of public infrastructural needs. According to the KNBS Economic Survey 2018, the development expenditure on roads grew by 19.2% to Kshs 134.9 bn in 2017/18 from Kshs 109.0 bn 2016/17.

Cytonn’s Nairobi Metropolitan Infrastructure Report records that the Kenya Roads Board (KRB) increased disbursements to the various road agencies and County Governments by 5.0% to Kshs 63.5 bn in 2017/18, from Kshs 60.5 bn in 2016/17. This was channelled to projects which positively impacted economic development in different sectors including real estate.

The report highlights the state of infrastructure in Nairobi metropolitan Area, showing that demand for infrastructure in the Nairobi Metropolitan Area has constantly outstripped supply due to the high population growth rate in the capital.

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According to the Kenya National Bureau of Statistics (KNBS), Nairobi County has the highest population density at 6,474 people per SQKM and growing at 4.1% p.a, followed by Kiambu County with a density of 818 people per SQKM and growing at 2.8% p.a.

In recent years, the government has increased efforts to enhance infrastructural development throughout the country as shown by the significant National Budget allocation, which recorded a 6-year CAGR of 7.7% from 2012 to 2019.

For the year 2018/2019, the budget allocation to infrastructure came in at Kshs 418.8 bn, which is 13.6% of the national budget. For the Nairobi Metropolitan Area, the total budget allocation increased by a 6-year CAGR of 73.1% over the same period.

The government has also created incentives to encourage private sector investments. For instance, the 25.0% tax exemption which allows investors in commercial property who spend on social infrastructure such as power, water, sewer lines, and roads to recover their expenses within 4-years, according to the Finance Bill of 2012.

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The analysis revealed that a large number of infrastructure projects are concentrated in Nairobi County followed by Kiambu County. With the exclusion of Nairobi County, Kiambu County had the highest percentage of paved roads at 16.0%, Murang’a at 9.7%, Machakos at 6.9% and Kajiado had the lowest at 5.9%.

With the increased disbursements of funds for roads development, construction of over 1000 km of roads within the Nairobi Metropolitan Area has been underway, with Murang’a County having the longest kilometres of roads under construction at 29.0% of the total road projects.

In terms of value, Nairobi has the highest value of investments in roads at 53.2% of the total amounts investments, as most of the roads under construction are class A roads. A total of 1,839.6km of roads are currently under construction within various counties in the Nairobi Metropolitan Area.

On rail transport, the report shows that use of rail transport is still low in Kenya accounting for only 0.5% of the value of output from the transport sector in 2017 compared to roads at 62.9%. The total Nairobi Metropolitan Area railway network coverage is 206 km, consisting of 75 km and 15 railway stations within Nairobi County, and 131 km and 5 railway stations within Kiambu County.

On sewerage connectivity, statistics from the World Health Organization shows that only 3% of Kenya’s population had a sewer line connection by the end 2016. Nairobi City, with the highest sewer connectivity, currently has 162.7Km of sewer lines covering its area of 695 SQKM.

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However, the existing sewer infrastructure in Nairobi serves areas such as Kilimani, Kileleshwa, and the CBD, leaving a majority of the city residents who live in low-end areas such as in the informal settlements with no access to sewer lines.

Kiambu County only has 11km of sewer line serving its total area of 2,543.4 SQKM, while Mavoko sub-county currently has only 31.1km of sewer lines serving its 963 SQKM total jurisdiction. Kajiado County also suffers from the same predicament, with none of its towns having sewerage connections, a situation that in September 2018 led residents of Kitengela to unveil plans to build their own sewer line.

In Murang’a County, only Murang’a town has access to a sewer, with other towns such as Kangema, Kenol and Maragua lacking sewer connectivity. Average sewer coverage in Nairobi Metro Area is 17% while in Nairobi it is 50%.

With the growing population, and urbanization particularly in satellite towns in Kiambu, Machakos and Kajiado Counties, concerted efforts have been made to improve sewer connectivity, with various projects being initiated mainly by the Athi Water and Sewerage Services Board. Kiambu and Machakos Counties have the largest share of proposed sewer projects at 65.5% and 23.9%

According to the Kenya Power Financial Report 2017, the Nairobi Metropolitan Area consumes more than 50.0% of Kenya’s electricity supply. Nairobi Region which includes Nairobi, Kiambu, Machakos, Makueni and Kajiado, recorded the highest electricity consumption in 2017, accounting for 55.0% of the total Kenya Power purchases according to Kenya Power.

Infrastructural development has been the tool for opening up previously inaccessible areas and improving connectivity which attracts investment. Investment in infrastructure has been proven to increase demand for property prices. For instance, land in areas along major highways registered consistent price appreciation, with an average 5-Year CAGR of 15.8%, signalling increased demand for the properties.

The Centre for Affordable Housing Finance in a report, states that infrastructural costs in Kenya account for approximately 25.6% of construction costs. By providing infrastructure, therefore, the government provides an impetus for real estate developers to develop more affordable units, as the cost of construction reduces considerably.

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