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					East Africa Infrastructure Report Q2 2012
Published : March 2012                      No. of Pages : 83                      Price:US$1175




Kenya
BMI View: Kenya's booming construction industry has faced significant headwinds, as rampant inflation
- due to a weak shilling, among other factors - has seen building costs soar. Moreover, with the Central
Bank of Kenya yet to show the commitment needed to support its beleaguered currency, we expect these
price pressures to continue to make life difficult for the sector over the coming quarters, with the
increasingly prohibitive cost of building materials and bank loans curbing demand for new developments.
Our downwardly revised forecasts for the construction industry in 2012 reflects the deterioration of the
economic picture, with real growth substantially eroded as a result. In light of this, we are now pencilling
in real growth of 2.5% for construction industry value in 2012.
Key developments include:
• The government has development plans with a total cost of US$22bn that include significant
improvements to roads, railways, seaports, airports, water, sanitation and telecommunications.
According to the Government, Kenya is focusing on these in the hope of attracting, accelerating
and retaining investors who often complain its dilapidated facilities increase the cost of doing
business, rendering Kenya's products uncompetitive in the global market
• The construction of the port of Lamu in northern Kenya has not yet begun, yet is already
generating much interest. Having been mooted for years, it seems that construction of the port is
to begin soon. The new facility at Lamu, which will cost US$5.3bn, will spread over 700 acres
of land. The port will serve as the maritime entry point to the Lamu Port-Southern Sudan-
Ethiopia Transport (LAPSSET) Corridor, which will include rail, road, oil pipeline and fibre
optic cable connections with South Sudan and Ethiopia. The site will also be home to a new
international airport. In total, price estimates for the multi-modal project range from US$16bn to
US$23bn. A new high voltage transmission line linking Mombasa to Nairobi should provide
much greater security of supply, transmitting electricity from the power rich coast to the
electricity starved capital. The new 450km high voltage transmission line will have the capacity
to handle 1,500MW of electricity, equal to Kenya's current installed capacity. The power line
will allow electricity generated on the coast around Mombasa to be transported to Nairobi to
feed the capital's electricity consumption. With a new 300MW coal power plant planned to be
built around Mombasa it is hoped that the power line will help distribute this new electricity
further up country.
• The decision by Kenya's National Environment Management Authority to approve the first
phase of the US$5bn Tatu City development is an encouraging sign for the country's residential
construction sector as it seeks to meet rapidly rising demand.

Sudan
BMI View: Rising political tensions represents a key risk to the economies and infrastructure sector of
Sudan and South Sudan. These developments reconfirm our view that, though a lack of data for the
separate entities impedes accurate forecasting, the Sudanese economy will endure a sharp recession in
2012. The lack of administrative systems to collect taxes in South Sudan and Sudan looking for new ways
to help bolster the economy and foment growth, coupled with the potential disruption to oil output in both
states, will accentuate pressures on public finances. As a result, BMI believes subdued government
revenues will significantly hinder much-needed public spending on housing and infrastructure for the
foreseeable future. Tensions have been raised by Sudan-South Sudan’s still undemarcated border, which
cuts through oil fields, as well as mutual allegations that each side backs proxy rebel forces against the
other.
On January 25 2012, it was reported that South Sudan closed the taps on more than half its oil
output, heightening tensions with neighbouring North Sudan after failing to agree on how to divide oil
revenues essential to both economies.’The situation in Sudan and South Sudan has reached a critical
point, it has become a major threat to peace and security across the region’, Ban Ki Moon told an
African Union summit in the Ethiopian capital.
With official data for both states not yet available, the forecasting environment remains fraught with
difficulties. However, for the time being, we also expect Sudanese infrastructure and utility sectors to be
negatively affected by the reduced income and the uncertain business environment. As a consequence,
we see construction industry value falling by -19.5% in 2012.

Among other key trends in the two countries, we note that:
1.Despite various plans to increase electrification level and include renewables in the energy mix,
results have largely yet to materialise in Sudan, where the main power utility, National
Electricity Corporation of Sudan (NEC) , is still fully state-owned. Despite having retained
the majority of the power infrastructure part of the previously unified state, Sudan existing
capacity is dismal.
2.We also highlight that the outlook for the utility sector in now independent South Sudan is still
relatively unclear. The Southern Sudan Electricity Corporation (SSEC), established as a
subsidiary of the Ministry of Energy and Mining (MEM), is responsible for generation,
transmission, distribution and sales of electrical energy to consumers in Juba, Malakal and Wau.
The government has, however, yet to release a sector strategy paper and present key projects.
3.South Sudan Vice President, Riek Machar, has promised that the country will mobilise
US$500bn in investment for infrastructure development in the next few years. The significant oil
potential of the country notwithstanding, we note that the target is highly ambitious, and we take
a cautious stance on the matter.
4.Sudan's Finance and Economy Minister Ali Mahmoud and the Arab Fund for Economic and
Social Development (AFESD)'s Director General Abdullatif Al-Hamad have signed a loan
agreement for the Upper Atbara and Stait dams' hydropower project in Eastern Sudan. Under the
terms of the agreement signed on December 28 2011, the AFESD will provide financial
assistance of US$111mn. The hydropower project is expected to result in a significant progress
in the Sudanese government's measures to conserve water, according to Al-Hamad. Meanwhile,
the AFESD has already provided US$400mn for the Merwoe Dam on the Atbara River and 50%
funding for the Roseires Dam on the Blue Nile River, according to Sudan's Electricity and Dams
Minister, Osama Abdullah. He added that both the dams are scheduled to become operational in
May 2012.

East Africa Infrastructure Industry

BMI Industry View 5
Kenya .. 5
Sudan .. 6
Tanzania . 7
SWOT Analysis . 9
Kenya Infrastructure Industry SWOT 9
Sudan and South Sudan Infrastructure Industry SWOT ... 10
Tanzania Infrastructure Industry SWOT .. 11
Market Overview . 12
Competitive Landscape . 12
Table: Number Of International Contractors In East Africa ... 12
Building Materials .. 15
Global ... 15
Africa 21
Cement Forecasts . 25
Table: Kenya Cement Production and Consumption Data .. 25
Table: Kenya Cement Production and Consumption Data .. 26
Industry Forecast Scenario ... 27
Industry Forecast Scenario ... 27
Kenya 27
Table: Kenya Construction And Infrastructure Industry Data . 27
Table: Kenya Construction And Infrastructure Industry Data . 27
Construction And Infrastructure Forecast Scenario . 28
Sudan 32
Table: Sudan Construction And Infrastructure Industry Data . 32
Table: Sudan Construction And Infrastructure Industry Data . 32
Construction And Infrastructure Forecast Scenario . 34
Tanzania ... 36
Table: Tanzania Construction And Infrastructure Industry Data 36
Table: Tanzania Construction And Infrastructure Industry Data 37
Construction And Infrastructure Forecast Scenario . 37
Transport Infrastructure Overview ... 41
Major Projects Table – Transport 43
Kenya 43
Key Projects – Kenya - Transport 43
Sudan 46
Key Projects – Transport – Sudan & South Sudan... 46
Tanzania ... 46
Table: Key Projects – Transport - Tanzania 46
Energy And Utilities Overview .. 48
Kenya 51
Tanzania ... 54
Sudan And South Sudan 55
Residential And Non-Residential Construction And Social Infrastructure Overview . 56
Kenya 60
Tanzania ... 60
Risk/Reward Ratings .. 62
Kenya Risk/Reward Ratings . 62
Sudan and South Sudan Risk/Reward Ratings . 63
Tanzania Risk/Reward Ratings 64
Regional Overview 65
Africa Infrastructure Risk/Reward Ratings: High Growth Masks Persistent Volatility . 65
Africa Infrastructure Risk/Rewards Regional Table 66
Global Overview . 71
Global Infrastructure View - Themes And Trends In Infrastructure For 2012 .. 71
Methodology ... 76
Industry Forecasts 76
Infrastructure Risk/Reward Ratings .. 81
Table: Infrastructure Business Environment Indicators .. 82
Table: Number Of International Contractors In East Africa . 12
Table: Kenya Cement Production and Consumption Data . 25
Table: Kenya Cement Production and Consumption Data . 26
Table: Kenya Construction And Infrastructure Industry Data . 27
Table: Kenya Construction And Infrastructure Industry Data . 27
Table: Sudan Construction And Infrastructure Industry Data . 32
Table: Sudan Construction And Infrastructure Industry Data . 32
Table: Tanzania Construction And Infrastructure Industry Data . 36
Table: Tanzania Construction And Infrastructure Industry Data . 37
Table: Infrastructure Business Environment Indicators . 82"

				
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Description: Rising political tensions represents a key risk to the economies and infrastructure sector of Sudan and South Sudan. These developments reconfirm our view that, though a lack of data for the separate entities impedes accurate forecasting, the Sudanese economy will endure a sharp recession in 2012. The lack of administrative systems to collect taxes in South Sudan and Sudan looking for new ways to help bolster the economy and foment growth, coupled with the potential disruption to oil output in both states, will accentuate pressures on public finances