If figures are anything to go by, Kenya’s Gross Domestic Product (GDP) is set to grow at a rate of 6 per cent in 2017. This is based on statistics issued by the World Bank in a recent Kenya Economic Update report.
Such a rapid economic growth will invariably result in pressure on the existing infrastructure – most notably our road networks – due to an increase in demand and supply of goods.
Ordinarily, it is the National Government that was the chief provider of infrastructure. Since 2013, Kenya’s administration has embarked on an immense push of improving the means of transport in Kenya.
This push has extended from airport expansion, building multi-lane highways, interchanges, expanding the Port of Mombasa, construction of a new Port in Lamu, and the Standard Gauge Railway (SGR).
One common thread of these infrastructure projects is their capacity to solve logistics challenges and movement of cargo within Kenya. The other common thread is the overburdening debt that is now closing in irreversibility, according to many spectators.
At present, the level of public debt in Kenya is at an all-time high of close to KES 3.566 trillion. As a consequence of this, Kenya may soon be unable to raise funds from the public kitty to meet the growing demand for roads and other quality transport facilities.
Enter the private sector. Recent media reports indicate that there is an intended shift towards an increased role of Public-Private Partnerships (PPPs) in infrastructure development.
Under PPP schemes, the Private Partner designs, finances, builds and operates road infrastructure projects.
The Public Partner (in our case Road Authorities) in return offers the Private partner a concession that entitles the Private partner to generate income for a specified period.
A standard concession period would ordinarily last for 20 to 30 years. After the concessional period is over, the ownership of infrastructure asset reverts to the Public Partner.
It is estimated that the private developer will have collected enough funds to recover all investments and profits.
The most convenient way of private enterprises to recoup their investment is by operating Toll Stations. Simply put, a toll station is a point at which the road users pay for use of the asset. This is slightly similar to the Weighbridges at Mariakani and Gilgil that trucks stop at.
In designing a revenue collection system the PPP set up will look the most suitable in terms of cost, system performance, flexibility, environmental impact and ease of use.
Kenyans already feel overtaxed. Most significantly, movers of cargo and importers of goods already pay Road Development Levy, Rail Development Duty, Import and Excise Duty and a myriad of other taxes and duties.
Addition of another tax by way of Road Usage Tolls may not be welcomed by a hug and a peck on the cheek!
As you think of the best way to move your cargo in Kenya, tell us your thoughts about Toll Stations on major roads. Will Kenyans willingly accept toll stations or will this system face reluctance? Leave a comment in the comments section below!