1 EAST AFRICAN COMMUNITY PRESENTATION ON THE STATE OF PLAY OF INFRASTRUCTURE DEVELOPMENT at the 3 rd EAC INVESTMENT CONFERENCE by PHILIP W. WAMBUGU DIRECTOR PLANNING AND INFRASTRUCTURE

2 1.0OUTLINE a) Need for the Development of efficient logistics systems in the region; b) Exploitation of inland waterways; c) Establishment of one stop border posts; d) Establishment of an EAC Capital Market Infrastructure; e) Infrastructure connectivity; f) Urban planning and the economics of traffic congestion; g) Road safety; and h) Zoning for development

3 2.0 DEVELOPMENT OF EFFICIENT LOGISTICS Why Logistics? Studies have estimated that up to 30% of the cost of doing business in sub Saharan Africa are attributable to ineffective logistics systems and management. The World Bank now thinks that addressing logistics failure in these regions is as important as developing the missing physical infrastructure.  Unnecessary inventories;  high interest costs;  Time related costs; and  Over investment in equipments and labor. EAC needs to embrace logistics management as a critical area of investments and facilitation. The Common Market Protocol provides for the development of logistics in the region.

4 3.0EXPLOITATION OF INLAND WATERWAYS TRANSPORT Why inland waterways transport? EAC region is blessed with navigable inland waterways – Lake Victoria, Tanganyika, River Kagera, River Nile among others. Are these waterways being exploited fully as important and cheaper modes of transport? The answer is no! What needs to be done? a) Develop a regional policy on inland waterways transport – the Lake Victoria Transport Act and the Inland Waterways Transport Agreement is a good starting point; b) Rapidly develop the necessary supportive infrastructure to enable exploitation of the potential – ports, weather stations, safety and security oversight and chart the routes; c) Link the inland waterways ports with the transportation corridors in the region; and d) Package the developments for private public partnerships.

5 4.0 ESTABLISHMENT OF ONE STOP BORDER POSTS Why one stop border posts? One of the best measures of the degree of integration of any two countries is the ease of passage across their borders. This has led some analysts to quip that the integration process begins at the borders and spreads to the capitals. One stop border posts is a critical process towards integration. What has EAC undertaken? a) Developing a regional draft legislation for debate and passage by EALA by August Draft pending consideration by a multi-sectoral Council in May 2010; b)Tanzania and Rwanda already have fast tracked a bilateral agreement for Rusumo border post and detailed design of one stop border post facilities is due to commence with financing from JICA; c) Detailed design of the proposed Namanga one stop border post ongoing; and d) Burundi and Rwanda operating one stop border post concepts at Nemba and Akanyaru

6 5.0 ESTABLISHMENT OF AN EAC CAPITAL MARKET Once again, why a regional capital market? A regional capital market, underpinned by an integrated financial market infrastructure with sufficient safeguards and operational efficiencies could act as a powerful avenue for consolidating domestic savings for investments and raising resources for long term infrastructure development. What has EAC done? a) The process of the regionalisation of the EAC financial markets is gaining momentum and therefore the infrastructure for the establishment of a regional capital market being created. This process is supported by the World Bank and SIDA, Sweden; b)The Common Market Protocol provides for cooperation in the financial and economic management including free movement of capital

7 6.0 INFRASTRUCTURE CONNECTIVITY IN THE EAC Is the region benefitting from infrastructure connectivity? The correct answer is no. Our oil pipelines do not interconnect, railways and road corridors don’t interconnect a fact brought to light during the electoral disturbances in Kenya in 2007, terrestrial fibre networks not interconnected, and power grids that also don’t interconnect among others. What is the EAC doing? a) Through the tripartite of COMESA, EAC, and SADC, pushing for the development of interconnected corridors including the North South, Central and the Northern Corridor and the proposed Lamu – Juba Addis corridor; b)Coordinating again through the tripartite Zambia, Tanzania, Kenya power interconnector. The MOU has already been signed by the three States; c)The EAC Broadband Infrastructure Network study completed and report to be considered by the Ministers of Communications next month; d)The Power Master Plan study being updated with the inclusion of Burundi and Rwanda capacity and interconnectivity assessments

8 7. URBAN PLANNING AND THE ECONOMICS OF TRAFFIC CONGESTION Have we paid sufficient attention to our urban centers as the location of our manufacturing, industrial and service sector activities in particular related to traffic facilitation? Today many of the East African medium to large cities operate in an environment of serious traffic congestion. This has the effect of destroying the air quality in those cities, raising the cost of transport substantially due to extended infrastructure facilities dwell times, loss of man hours, and stress all lowering the appeal of our cities as investment centers. What can be done? a) Better urban planning and traffic management; b) Introduction of urban mass transit systems, park and ride systems etc.; c) Construction of bypasses for transit traffic and priority lanes for public service vehicles; and d) Tolling and congestion pricing.

9 8.0 ROAD SAFETY Our region has the ignominy of some of the highest deaths on the roads. Most of the victims of these road deaths are in the productive age groups. The impact of these road deaths on businesses and investors are loss of productive personnel, equipment, high insurance and medical bills. These risks again reduce the appeal of our region for investments. The region has not made major strides in addressing this area but an ongoing study on an EAC Transport Facilitation Strategy is expected to yield a regional strategy to address the menace. Individual Partner States are implementing strategies that cannot be said to be effective as the death tolls are on the rise.

9.0 ZONING FOR DEVELOPMENT Are we taking advantage of the enhancement in the infrastructure quality and capacities to zone for development? Are our airports, ports, railways and road corridors spurring industrial development and attracting investments? Surely not quite! Strategies such as the Spartial Development Initiative for the Northern Corridor by COMESA and the Transit Transport Coordination Authority and the Central Corridor Development Authority are meant to address this gap. Have they succeeded? Can development zoning be applicable for quality properties abutting these quality infrastructures? How can we avoid the concept of ‘dead’ infrastructure capital – capital investments that yield way below their true returns. 10

11 THANK YOU ALL FOR YOUR ATTENTION