Third Eye

Nairobi Expressway an e-commerce game changer

Thursday, July 8th, 2021 00:00 |
The ongoing construction of Nairobi Expressway as of April 2021. Photo/Courtesy

Infrastructure development is critical in driving Foreign Direct Investment (FDI) because logistics plays an integral part in global business development, especially e-commerce, now a leading source of wealth and jobs at home and abroad. 

Without seamless road and rail connectivity, it is difficult to deliver goods to markets and raw materials to manufacturing plants.

Logistics determines the turn-around time that companies take to deliver goods to consumers.

These, therefore, are the lenses through which ongoing construction work on the Nairobi Expressway should be viewed.

Once completed, it will change the face of Kenya’s capital and signal to the world that Nairobi is serious about positioning itself as a global city. 

One benefit of this is that more investors, including start-ups in e-commerce space, will find Nairobi attractive as a destination for doing business.

This, in turn, will create value chains that will connect primary producers in rural areas to processors in Nairobi, thus creating more opportunities for jobs and income generation.

However, for the Expressway to give true value to both private and corporate citizens, it will need to be completed by train and bus systems to ensure every suburb is easily accessible to people, goods and services.

Compared to the current system of 13-seater vehicles as the primary mode of public transport, buses and trains are cheaper and safer.

This is in addition to reducing the number of vehicles clogging Nairobi roads.

In this regard, Kenya can borrow a leaf from Japan. Before Japan’s leadership took the momentous decision to build roads and railways to every corner of the island, remote areas of the hilly country were practically inaccessible, thus locking them away from economic inclusion at a time when Japan was stamping its presence as a global manufacturing destination.

With the decision to open up every small town, Japan unlocked untold value for its citizens, who practically became indispensable cogs in its giant industrial engine.

With this, Japan chalked up enviable milestones, such as conquering the car market in US and Africa and becoming the third largest economy at the time after America and Germany.

This is a key lesson for policy makers and implementers in Kenya. It is imperative that they market projects like the Expressway and light trains as investments that facilitate commerce and economic activity.

They are not just meant to reduce traffic jams. Ideally, they should reduce time wasted in commutes, estimated at over Sh50 billion a year.

Secondly, they should translate into economic gains because goods, say flowers and fruits, can reach the airport faster, hence fetch higher prices abroad.

Similarly, companies in e-commerce, particularly in Nairobi and other urban areas can lower their logistics costs, improve efficiency and customer satisfaction because they will have multiple, unclogged channels through which to drive their businesses.

This should lead to an increase in local investment as well as FDI. Already, innovative start-ups like Kune, which is building a factory in Nairobi with capacity to process 5,000 packed meals a day, have invested hundreds of millions of shillings through FDI.

Yet, this is just the most recent entrant riding on improved logistics. As such, there is huge potential to create similar opportunities that will drive e-commerce innovation and job creation.

The fact that last month Nairobi made its way out of the list of 100 most expensive cities globally will also cement its place as an ideal destination for FDI.

This was an important development from a global point of view even if the direct benefits may be lost to Kenyans who are feeling the pinch of economic slowdown over the last 18 months.

However, the big picture view of Nairobi ought to be an optimistic one considering that other mega infrastructure projects – such as sewerage systems and road expansions being undertaken in adjoining areas like Mavoko, Ruiru, Kikuyu and Rwaka will also improve quality of life and create new business opportunities since industries are likely to follow these investments. 

Indeed, a leather factory and a water treatment plant have already come up in Mavoko.

Plans are under way to introduce a light railway to service them as well as Konza Technopolis, where firms like Huawei Technologies have taken up space ready to fire up digital businesses.

All these infrastructure projects will ultimately increase Nairobi’s competitiveness as a business destination.

— The writer is a Partner and Head of Content at House of Romford – [email protected]

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