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East African economies plan to increase infrastructure spending

East African economies plan to increase infrastructure spending

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East African countries plan to significantly increase spending on infrastructure projects in the budget.

Kenya, Tanzania, Uganda, Rwanda and Burundi will unveil plans to fund the building of more roads, railways and power plants, as well as expand services such as health care and education, for the year starting July 1. In most cases, this will raise budget gaps as a percentage of gross domestic product, and increase borrowing requirements.

Spending will probably climb about 10% in Kenya in the next fiscal year, 17% in Uganda and 11% in Rwanda, while it will be broadly flat in Tanzania, the nations’ respective governments have said in forecasts.

Kenya and Tanzania see fiscal gaps narrowing, Uganda and Rwanda's to widen

While the governments forecast that revenue will increase by double digits next year, Kenya, Uganda and Tanzania all have plans to approach the debt markets to help raise the funds to finance their deficits. In Kenya's case, the nation will borrow about 607 billion shillings ($6 billion) locally and internationally in 2019-20, according to Treasury Secretary Henry Rotich.

Government revenue will increase in double digits across East Africa

GDP in East Africa will probably expand 5.9% in 2019 and 6.1% in 2020, according to the African Development Bank, making it the fastest-growing region on the continent. Economic expansion in Kenya, Tanzania, Uganda, Rwanda and Burundi will average a combined 5.5% for the next two to three years.

Infrastructure Boost

Kenya is implementing its so-called Big Four agenda, which will see the region's largest economy hand over no less than 500,000 houses to first-time homeowners by June 2022, and develop more manufacturing, food production and health care to create jobs in a nation where unemployment is a sticking electoral issue. The projects will cost 405 billion shillings ($4 billion) in the coming year, budget estimates show.

If approved by lawmakers, about 7.5% of Tanzania's 33.1 trillion-shilling ($14 billion) budget will go toward building a standard-gauge railway line that will link the East African nation's commercial city of Dar es Salaam with the town of Mwanza along Lake Victoria, through the capital, Dodoma. The country is due this month to start building the 2,115-megawatt Rufiji hydropower project.

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