News December 2004 Article

Hon. Eng. Raila Amolo OdingaInterview with Hon. Eng. Raila Amolo Odinga Minister for Roads and Public Works

Nairobi, Wednesday 8th, December 2004 - The new Government has been in power for over 2 years, and we have read in a survey that this Ministry is considered to be one of the most active Ministry, so can you tell us what have been the main challenges and achievements of this Ministry so far?

This is the Ministry for Roads and Public Works. Prior to the reshuffle, it included Housing, which has now gone over to the Ministry for Lands. We are now solely responsible for Roads and Public Works.

Roads as you know are like blood vessels in humans, to a country and its economy. As the blood vessels transport blood to the whole of the body, so do roads convey goods, services and people to all parts of the country. The importance of roads needs no emphasis. When this government took over, early last year, we inherited a very sorry state of affairs as far as roads are concerned.

We have a road network of about 150 000km, out of this 63 000km are classified roads, meaning they are categorised as Class A to E roads and others. The remainder are unclassified roads. Of the 63 000km of classified roads 9 000km are Bitumen, while others are either gravel or earth roads. At our independence in 1963, we had only 1 008 km of tarmac roads, since then we have increased that by over 7 000km. As you are well aware, roads require constant maintenance, and because of the standoff between the former government and the development partners, Kenya was not able to access credit from the international financial markets. As a result, therefore, it was unable to obtain the capital that was required to maintain the construction of new roads. When we took over only 57% of the existing network was in maintainable condition, and 33% of that network had completely collapsed, requiring total reconstruction due to lack of maintenance.

In July 2000, we set up a Kenya Roads Board (KRB) under an Act of Parliament, with the responsibility of presiding over planning, development and maintenance of roads. It is an autonomous body with an independent board, consisting mainly of people from the private sector. The chairperson of the board has to, by the Act, come from the Private sector. The KRB administers a fuel levy fund, which was introduced in the 1990’s, and is a tax that is levied on motorists and is mainly used for the maintenance of roads. It provides a major source of funding for the roads in the country, the other source being budgetary allocation by the Exchequer. The KRB has three main agencies under it. The first is the Department of Roads at the Ministry of Roads and Public Works, which deals with Class A, B & C roads. These are international highways, the national highways and trunk roads. Secondly, there is the District Roads Committees (DRC), which deals with Class D, E, and other roads. These are rural access roads and feeder roads. These DRC’s consist of local leadership: two civic leaders, a women’s representative, an MP, a District Commissioner and a District Works Officer from the Ministry of Roads and Public Works. Thirdly, there is the Kenya Wildlife Service (KWS), which deals with all the construction and maintenance of roads in the national parks and game reserves. The fuel levy fund that the KRB administers is distributed amongst these agencies, in accordance with a formula that is spelt out in the Act: 57% goes to the Department of Roads of the Ministry, 24% goes to the District Roads Committee and other Constituency Committees, 16% goes to KWS and 3% goes towards the overhead costs of the KRB.

When we took over, we came up with a short term, mid term and long-term program. In the short term, we had to try to repair and maintain the roads that had deteriorated, and identify funding for the major reconstruction work in the country, and also for the construction of new roads. It was decided that the fuel levy fund be dedicate purely to the maintenance and rehabilitation of the dilapidated road infrastructure. We decided to source funding from the Exchequer and development partners for major construction works of building new roads. We also found that roads in the urban areas, which fall under the Local Government, were also in very bad shape, as most of the local authorities had no capacity to maintain the roads in these areas. Therefore, I decided to gazette the major ones as sub-agents of the Department of Roads – these are the City Councils of Nairobi, Kisumu, and the Municipalities of Mombasa, Nakuru and Eldoret. Now funding is direct and supervision done by staff from the Ministry. This has helped.

We have achieved a lot in the time that we have been in power. We have managed to reduce the percentage of roads that are un-maintainable from 43% to 35% within a period of 18 months. This needs to be appreciated, especially when you consider that road construction is very capital intensive, and most of last year we have spent the time negotiating with developing partners, setting the groundwork and creating an enabling environment for funding purposes. Some funding was promised for this year, but most of it is for 2005. We have also received some allocations directly from the Exchequer, which we have used for construction purposes, and a number of contracts have been awarded already. The effect of the measure we have taken will become apparent in the 3rd and 4th year of our term. This is a long-term process, and results are not always immediately apparent, unlike establishing free primary school education, for example.

A major impediment that we have experienced is the procurement rules. In the periods when we had high levels of corruption in the government in general, and in this Ministry in particular, the donors put up some very tough conditions, and a number of roadblocks were introduced aimed at curbing corruption. These cumbersome procedures make it very difficult for the commissioning of works. It takes a very long time to have a contractor on site. For example, from the time of inception to the time that the contractor actually moves on site, there is a delay of anything from 36 to 48 months. We are trying to reduce this, and introduce new procurement rules through a Procurement Bill currently before Parliament.

Another thing that we have found here was that corruption was very high. Particularly a phenomenon developed here that I described as “Cowboy Contractors”. These were contractors with political connections, who were operating here like a cartel. They were the only ones that were short-listed to quote on projects. At the same time, they colluded with colleagues in the field and headquarters, while dealing with, political godfathers at State House. The cartels had the effect of inflating the prices of contracts, sometimes twice or three times the actual cost. The other problem was that, some of the staff in the Ministry had their own construction and materials supplies companies. Here there was a conflict of interest. They were the ones who had advertised the tender, the ones that reviewed and evaluated the contracts and awarding them. This at times they awarded to their own companies, where they again supervised the works, carried out the inspections, issued certificates for payments and then came to the Ministry for payment. Yet at the same time, they were getting their salaries at the end of the month. There was need to act. What we did was to immediately give instructions prohibiting that practise, and instructed those with companies to either wind up those companies and remain full time civil servants, or resign and become full time contractors.

All these measures, taken to combat the Cowboy Contractors, have had the effect of substantially reducing the cost of construction in the country. When we came to power, we discovered the cost of asphalting 1km of a Class A or B road was Kenya shillings 50 million and we have reduced it to Ksh 20 million. The cost of graveling a 1km road was Kenya shillings 5 – 6 million and we have reduced it to Ksh 2 million per km. Grading a road was Ksh 50 000 KSH per km and it has come down to 15 – 20 000 KSH. The net affect of all these measures is to increase the amount of kilometres you can do with the same amount of money. The net effect is now positively felt all over the country.

The Public Works part of this Ministry is essentially involved in all public and government buildings; like the ministry buildings, universities, hospitals, dispensaries, police lines etc. There are quite a number dotted across the country, which were started and then stalled. When we took over, we came up with a program to deal with these stalled building projects. From recent research, we found out that of 199 stalled projects, we have commissioned work to commence on 100, and some already completed. Some of these were buildings were first commissioned in the 1980s, and had been completely neglected. As we came in, we took stock of this situation, and raised money from the Exchequer in order to rectify the situation within the next 3 years. We have tried to do our best here at the Ministry. Before Housing was removed from this Ministry to go to the Ministry of Lands (now Ministry of Lands and Housing), we had also developed a new Housing Policy.

Your Ministry recently hosted the meeting of the African Road Maintenance Association. Could you tell us about the outcome of this conference?

This conference was meant to compare the experience of those who are in charge of road maintenance across Africa, as the problems that are experienced across Africa are almost identical. Yet people are praising the measures that we have taken here in Kenya as we are leading the way, which other countries are following. A country that has also carried out radical reforms is Tanzania. Therefore, we found that there is a lot that we can learn from each other as African countries. Most countries in Africa have moved away from the single party system, which came with a very opaque system of doing business. As they moved into a more open and transparent societies, they have had to implement many reforms in several sectors, and particularly in the roads sub sector.

We found that there has been a lot of money spent in the construction of new roads, but little was being spent on maintenance, and we found that the roads had basically, collapsed. However, we find that most development partners are complaining that still too much money is spent on maintaining existing roads, rather than on constructing new roads to open up the country, so we remain in a vicious circle. There is a Swahili saying, that literally translated means “If you do not repair a crack in the wall, you will soon rebuild the wall”. You can see how a pothole left untended can expand, and then you will soon have to resurface the whole road.

Why is the choice being made to use tar on the roads, which is more expensive as it is linked to petroleum prices, rather than cement concrete that is longer lasting and locally produced?

Firstly, tar (or bitumen) is slightly cheaper, even though it is petroleum dependent. It is true that as petroleum prices fluctuate so does the cost of construction increase. However, it is also true that the concrete roads are more durable; they tend to last double the life span of bitumen roads. Bitumen roads can be designed to have a varying life span; they can be designed to last 5 years, 10 years or 20 years. So the concrete equivalent of a 20-year bitumen road will last 40 years, yet it only costs you 20 – 25% more than the bitumen road. Therefore, it is worth looking at the concrete equivalent; however, it also depends upon the amount of money that you have at your disposal for the construction of roads. For example, with the same amount of money, you can do more kilometres of bitumen roads, and this opens up the country in the short term.

Nevertheless, I am determined to introduce concrete roads, which has never been done before here in Kenya. The technology is still new, the equipment does not yet exist here in the country, it needs to be purchased and I am trying to obtain a purchase allocation from the Treasury. In fact, we are looking to introduce concrete surfacing along parts of the Northern Corridor.

The development of the Northern Corridor is one of your major projects, could you tell us a little more about it, as well as your other key projects for the 5 years to come?

The Northern Corridor is a major artery in the heart of the country. It runs from the Port of Mombassa, through Nairobi, to the Western border with Uganda. The road is 1200 Kilometres in length. It is the major supplier of goods, to and from the Port of Mombasa, both in terms of imports and exports. Because our rail network is in a sorry state of affairs, up to 75% – 80% of the cargo coming out of the Port continues by road, and only 20% - 25% goes by rail. This should actually be the other way round, as this puts heavy pressure on our roads, as very heavy loads are carried by road. We are in the process of now upgrading it through the funding from the World Bank, Nordic fund and the EU. We commissioned a study, funded by the World Bank, to investigate the feasibility of introducing concessioning. This means that, the Private Sector would come into the construction of roads on a B.O.T. (Build Operate and Transfer) basis, and then subject it to tolling. The study established that concessioning is viable in Kenya; however, conventional tolling would only be possible on the Northern Corridor, as it is entirely dependent upon the volume of traffic that travels the road. In fact, you would need to have in excess of 10 000 vehicles per day. We have decided to do an experiment on tolling on a section of the Northern Corridor. This will be along an 82km stretch from the Machakos turnoff, through the centre of Nairobi on the southern bypass, to another town called Rironi. We want to do it as a dual carriageway and contract it out. We are doing this because we have realised that public funding alone is inadequate to meet our requirements as a country, and as a result, we need to attract private funding.

The consultants, who are funded by the World Bank, have done the design of this road, as a result of which we invited investors to come to a conference last month (November 2004). About 25 companies responded, from Malaysia, India, Italy, Germany, the UK, South Africa and Kenya, however we have decided that we will re-advertise again internationally to invite more companies to come for the bidding stage.

In Nairobi itself, there is also an Eastern bypass and Northern bypass, as well as the aforementioned Southern bypass. These bypasses are basically meant to ease the traffic congestion in the town centre. As you know, the main highway passes through the centre of the town leading to great congestion, and most of the traffic is transiting to West of Kenya and beyond. We want to divert that traffic away from the centre, as it puts undue pressure on the city roads, as well as contributing to pollution in the capital. Therefore, the plans are ready for these bypasses, and we are waiting for funding in order to implement them.

As you can see we are putting into action many key strategies for the roads network, and this Ministry was recently voted the most active by a recent poll.

Considering that, roads are the vital arteries to the country and its economy, what is your personal vision for the development of Kenya and the Kenyan economy in the coming years?

I am very optimistic as we continue to deal with a lot, as a government, since coming into power. As you may well know, this government inherited an economy with a negative growth coupled with high unemployment and inflation rates. We have turned things round. We have come up with a Poverty Reduction strategy, carried out a number of reforms in key areas of the economy – Agriculture for example – and now see positive trends returning in many sectors of the economy. In the past farmers were not getting paid, and under this administration they are getting paid a fair price for their produce on time, as well as having their arrears paid back to them, so essentially people in rural areas are getting money in their pocket. Some people are saying that the 1 200 000 new jobs have not been created, but we have created many jobs, and by putting money into the pockets of the rural communities we have also created consumers which is good for the economy.

Next year, we are introducing a programme called Roads 2000. This is a programme funded by several donors, and is meant for the construction of roads in the rural areas, using labour intensive methods so that we can employ high levels of manual labour. Various donors have taken different areas of the country for funding; for example, the EU is in the East of Kenya, the African Development Bank is in the Rift Valley, as is the World Bank, we also have projects in Coast as well as Nyanza Provinces. Through these projects, many jobs are being created.

In the Health Sector, a lot has been done to improve the infrastructure on the ground. There is also the insurance fund scheme, which we have decided to implement in stages. This is going to make health services available and affordable to the majority of people in the country. Also by introducing free primary education, we have removed a very heavy burden from parents who previously had to pay school fees.

In terms of industry, many of the previously collapsed factories have been revived over the last couple of years. New investments are coming into the country and our exports have increased to the non-traditional markets. Now we are making use of AGOA and the opportunities available. We are major exporters now in the region; for example, Kenya is the biggest trading partner of both Uganda and Tanzania.

It takes time to turn around an economy, particularly the one that we inherited, but we are all very optimistic that things are going to work out fine.

What would be your final message to the readers of eBiz Guides in terms of investing in Kenya?

Kenya is ready for investment and is a very attractive and safe investment destination for many reasons. Firstly, as Kenyans, and as a government, we want to move away from aid dependence, because it cannot help the country to develop and realise its full potential on its own and it is not sustainable. This is the reason why we are looking to attract more investment and trade. We want partners to open markets for our goods, as we continue to buy from them. Secondly, we would like to see more investors come to Kenya. Opportunities abound here, in the construction business of roads, rail and housing, besides the sectors of industry, agriculture, trade, the supply of medicine and equipment, telecommunications, IT, and so on.

We are happy to welcome people to either come and invest on their own, or partner with Kenyans in joint ventures. This is the only way I feel we can achieve our objective of between 7% – 10% growth for this economy.

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