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Kenya National Chamber of
Commerce and Industry

WORKSHOP ON
Feasibility study on use of Private Finance in
Urban Road Infrastructure Development in
Eastern Africa
Held on November 22, 2006, at The Stanley Hotel Nairobi

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The Study

Session 3
By
Musyoka Fred kyendo
Lead Consultant
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Scope of the Study

•

The study covered three East African Cities i.e. Nairobi, Dar es
Salaam and Kampala

•

It covered three roads, one in each city

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Scope of the Study

•

These are; Jogoo Road in Nairobi; Gayaaza Road in Kampala
and Old Bagamoyo Road in Dar es Salaam

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Methodology – Traffic Count

•

A 12 – hour traffic count was conducted in each city

•

In Nairobi, the study counted traffic on Jogoo Road

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Methodology – Traffic Count
•

In Kampala, we counted traffic on Gayaaza Road

•

In Dar es Salaam, we conducted on Old Bagamoyo Road

•

These are typical Urban Roads

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Methodology – Choice of Road

•

•
•
•

Roads deliberately chosen to test Business model’s universal
applicability.
Jogoo Road is densely populated with vehicles
Gayaaza Road is moderately populated
Old Bagamoyo Road is sparsely populated

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Moscom Limited

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Traffic Count - findings

z

Jogoo Road - 50,840 Vehicles

z

Gayaaza Road - 13,558 Vehicles

z

Bagamoyo Road - 8,953 Vehicles

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8

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Traffic Count – Modal Split

Qty in 000s

Modal Split on Studied roads
30,000
25,000
20,000
15,000
10,000
5,000
0

Models

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9

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Traffic - Survey
•

An open ended questionnaire was administered on 1,000
Motorists in Nairobi and 300 each in Kampala and Dar Es
Salaam

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Moscom Limited

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10

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Traffic - Survey
•

1,600 motorists interviewed

•

Some 1440 (90%) motorists respond accurately

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Moscom Limited

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11

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Findings
•

PSV’s form the dorminant mode of transport on both
Jogoo and Gayaaza Roads

•

SUVs are the dominant mode on Old Bagamoyo Road

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The Findings – Cont’d
•

To make a profit, PSV’s must make six-round trips a day

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The Findings – Cont’d
•

All Roads studied are overdue for reconstruction and
expansion

•

Urban tolling methods are completely different from trunk
road methods

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The Findings – Cont’d
•

Automated tolling systems are viable in urban roads

•

Average toll-rates in urban roads are way lower than in
trunk roads

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The Findings – Cont’d
•

67 per cent of motorist interviewed ready to pay for good
roads

•

They are ready to pay directly to a contractor

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16

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The Findings – Cont’d
•

•




Jogoo Road is viable @ US$0.27 per day
Gayaaza and Old Bagamoyo are profitable @ US$0.81 per
day
Traffic density determines the toll rate: The higher the ADT
the lower the toll rate and vice versa

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17

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Costs – Time Lost in jams
•

A significant 50% per cent of the sample spent two hours a
day in traffic jams

•

Another 44% complained of spending one hour a day held
in traffic jam

•

A whole 94% of the sample spent between an hour and two
hours in traffic

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Costs – Waste Fuel
•

A majority 38.1% waste 3litres of fuel a day in traffic jams

•

34% of respondents waste two litres a day

•

Another 27% waste four litres a day

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Cost – Benefit Analysis
•

In effect 99 per cent of respondents “waste” 2 litres of fuel a
day

•

All roads in this study are overdue for
reconstruction/expansion

•

This is the study of the traffic jams some that last for up to
2hours or more

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Costs – fuel “wasted”
•

Kenyan motorists lose Kshs 194.14 ($2.7) per day per
capita on “ fuel wastage”

•

Ugandan motorist “burn” UGshs 6860 ($3.71) per head per
day

•

Tanzania motorist “burn” TZShs 3,848 ($3.12) per head per
day

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Costs – Man Hours Lost
KRB valued Man-hours lost as follows:
•
•
•
•
•

Senior Manager
Managers
Supervisors
Skilled Workers
Unskilled Workers

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-

$14.00 per hour
$7.00 per hour
$4.10 per hours
$1.40 per hour
$0.82 per hour

Moscom Limited

Infrastructure

22

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National Productivity Loss
Kenya losses $271 million a year to traffic jams on
Jogoo Road
•

•

Ugandan losses $73 million a year

•

Tanzania losses $49 million a year

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To Build or not to Build
•

Smooth wide roads save the country on fuel import bill as
follows:

•

Kenya $29 million; Uganda $13.1 million; Tanzania $7.3
million a year

•

Add to these the productivity loss just demonstrated

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Ready to Pay
•
•
•
•
•
•

Some 950 respondent i.e. 67% of the sample were ready to
pay
Of these, PSVs form 45 per cent
private cars/taxis 34%
SUVs & Pick-ups 12%
Others 19%
All ready to pay directly to contractor

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Can Investors make Money
•
•
•
•
•
•

Yes,
Assumption;
Only 67% of Motorist will pay
Toll rates will be $0.27 in Kenya and $0.81 in Uganda and
Tanzania
The concession will last 25 years
Historical MV growth rates will be maintained in the next 25
years

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MV Growth Rates
•

Kenya Historical growth rate is 4.8% per annum

•

Tanzania 5.5% per annum

•

Uganda 4.5% per annum

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27

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Toll Collection
•

Will be collected by Non-stop, fully automated system

•

Transactions enabled by a 5.8 GHz microwave link between
the Road –Side-Unit and the In-Vehicle-Unit on the
windscreens

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28

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Toll Collection
•

Provides subsystems for electronic transactions at the
lanes, data collection, supervision, monitoring, violation,
processing, toll clearance operations and reporting facilities

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Moscom Limited

Infrastructure

29

Development
Consultancy. Research. Education.Advocacy

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and Consultancy

ITEC
ENGINEERING

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System’s Architecture

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Moscom Limited

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30

Development
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Toll Collection
•

Most effective for congested highways and bridges (100,000
vehicles and over)

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Moscom Limited

Infrastructure

31

Development
Consultancy. Research. Education.Advocacy

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and Consultancy

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IRR @12% Discount Rate
Assumption 67% paying
•
•
•

Jogoo Road: IRR
Old Bagamoyo Road:
Gayaaza Road:

Institute of

=
=
=

Moscom Limited

Infrastructure

32

31.2%
27.24%
27.10%

Development
Consultancy. Research. Education.Advocacy

Economics Research
and Consultancy

ITEC
ENGINEERING

LTD
IRR @15% Discount Rate
Assumption 67% paying
•
•
•
•

Jogoo Road: IRR
=
28.7%
Old Bagamoyo Road:
=
23.34%
Gayaaza Road
=
24.5%
The rates are more robust at 80% motorist paying

Institute of

Moscom Limited

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33

Development
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ENGINEERING

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IRR 12@% Discount Rate
Assumption 80% paying
•
•
•

Jogoo Road IRR
Old Bagamioyo Road
Gayaaza Road

Institute of

=
=
=

Moscom Limited

Infrastructure

34

38%
34%
37.4%

Development
Consultancy. Research. Education.Advocacy

Economics Research
and Consultancy

ITEC
ENGINEERING

LTD
IRR 15@% Discount Rate
Assumption 80% paying
•
•
•

Jogoo Road IRR
Old Bagamioyo Road
Gayaaza Road

Institute of

=
=
=

Moscom Limited

Infrastructure

35

33.30%
35.00%
29.4%

Development
Consultancy. Research. Education.Advocacy

Economics Research
and Consultancy

ITEC
ENGINEERING

LTD
Risks
•

Motorists could choose free roads and avoid toll roads

•

Construction costs could escalate given the rapidly rising
price of crude oil

•

Monopolistic tendencies on the part of the contractor

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Vote of Thanks

I thank you all for coming
and your keen interest

Institute of

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Infrastructure

37

Development
Consultancy. Research. Education.Advocacy

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and Consultancy

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ENGINEERING

LTD

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SPIURT 2-3

  • 1. Kenya National Chamber of Commerce and Industry WORKSHOP ON Feasibility study on use of Private Finance in Urban Road Infrastructure Development in Eastern Africa Held on November 22, 2006, at The Stanley Hotel Nairobi Institute of 1 Infrastructure Development Consultancy. Research. Education.Advocacy Moscom Limited Economics Research and Consultancy ITEC ENGINEERING LTD
  • 2. The Study Session 3 By Musyoka Fred kyendo Lead Consultant Institute of 2 Moscom Limited Infrastructure Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 3. Scope of the Study • The study covered three East African Cities i.e. Nairobi, Dar es Salaam and Kampala • It covered three roads, one in each city Institute of Infrastructure 3 Development Consultancy. Research. Education.Advocacy Moscom Limited Economics Research and Consultancy ITEC ENGINEERING LTD
  • 4. Scope of the Study • These are; Jogoo Road in Nairobi; Gayaaza Road in Kampala and Old Bagamoyo Road in Dar es Salaam Institute of Infrastructure 4 Development Consultancy. Research. Education.Advocacy Moscom Limited Economics Research and Consultancy ITEC ENGINEERING LTD
  • 5. Methodology – Traffic Count • A 12 – hour traffic count was conducted in each city • In Nairobi, the study counted traffic on Jogoo Road Institute of 5 Infrastructure Development Consultancy. Research. Education.Advocacy Moscom Limited Economics Research and Consultancy ITEC ENGINEERING LTD
  • 6. Methodology – Traffic Count • In Kampala, we counted traffic on Gayaaza Road • In Dar es Salaam, we conducted on Old Bagamoyo Road • These are typical Urban Roads Institute of Moscom Limited Infrastructure 6 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 7. Methodology – Choice of Road • • • • Roads deliberately chosen to test Business model’s universal applicability. Jogoo Road is densely populated with vehicles Gayaaza Road is moderately populated Old Bagamoyo Road is sparsely populated Institute of Moscom Limited Infrastructure 7 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 8. Traffic Count - findings z Jogoo Road - 50,840 Vehicles z Gayaaza Road - 13,558 Vehicles z Bagamoyo Road - 8,953 Vehicles Institute of Moscom Limited Infrastructure 8 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 9. Traffic Count – Modal Split Qty in 000s Modal Split on Studied roads 30,000 25,000 20,000 15,000 10,000 5,000 0 Models Institute of Moscom Limited Infrastructure 9 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 10. Traffic - Survey • An open ended questionnaire was administered on 1,000 Motorists in Nairobi and 300 each in Kampala and Dar Es Salaam Institute of Moscom Limited Infrastructure 10 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 11. Traffic - Survey • 1,600 motorists interviewed • Some 1440 (90%) motorists respond accurately Institute of Moscom Limited Infrastructure 11 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 12. Findings • PSV’s form the dorminant mode of transport on both Jogoo and Gayaaza Roads • SUVs are the dominant mode on Old Bagamoyo Road Institute of Moscom Limited Infrastructure 12 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 13. The Findings – Cont’d • To make a profit, PSV’s must make six-round trips a day Institute of Moscom Limited Infrastructure 13 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 14. The Findings – Cont’d • All Roads studied are overdue for reconstruction and expansion • Urban tolling methods are completely different from trunk road methods Institute of Moscom Limited Infrastructure 14 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 15. The Findings – Cont’d • Automated tolling systems are viable in urban roads • Average toll-rates in urban roads are way lower than in trunk roads Institute of Moscom Limited Infrastructure 15 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 16. The Findings – Cont’d • 67 per cent of motorist interviewed ready to pay for good roads • They are ready to pay directly to a contractor Institute of Moscom Limited Infrastructure 16 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 17. The Findings – Cont’d • •   Jogoo Road is viable @ US$0.27 per day Gayaaza and Old Bagamoyo are profitable @ US$0.81 per day Traffic density determines the toll rate: The higher the ADT the lower the toll rate and vice versa Institute of Moscom Limited Infrastructure 17 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 18. Costs – Time Lost in jams • A significant 50% per cent of the sample spent two hours a day in traffic jams • Another 44% complained of spending one hour a day held in traffic jam • A whole 94% of the sample spent between an hour and two hours in traffic Institute of Moscom Limited Infrastructure 18 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 19. Costs – Waste Fuel • A majority 38.1% waste 3litres of fuel a day in traffic jams • 34% of respondents waste two litres a day • Another 27% waste four litres a day Institute of Moscom Limited Infrastructure 19 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 20. Cost – Benefit Analysis • In effect 99 per cent of respondents “waste” 2 litres of fuel a day • All roads in this study are overdue for reconstruction/expansion • This is the study of the traffic jams some that last for up to 2hours or more Institute of Moscom Limited Infrastructure 20 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 21. Costs – fuel “wasted” • Kenyan motorists lose Kshs 194.14 ($2.7) per day per capita on “ fuel wastage” • Ugandan motorist “burn” UGshs 6860 ($3.71) per head per day • Tanzania motorist “burn” TZShs 3,848 ($3.12) per head per day Institute of Moscom Limited Infrastructure 21 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 22. Costs – Man Hours Lost KRB valued Man-hours lost as follows: • • • • • Senior Manager Managers Supervisors Skilled Workers Unskilled Workers Institute of - $14.00 per hour $7.00 per hour $4.10 per hours $1.40 per hour $0.82 per hour Moscom Limited Infrastructure 22 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 23. National Productivity Loss Kenya losses $271 million a year to traffic jams on Jogoo Road • • Ugandan losses $73 million a year • Tanzania losses $49 million a year Institute of Moscom Limited Infrastructure Development 23 Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 24. To Build or not to Build • Smooth wide roads save the country on fuel import bill as follows: • Kenya $29 million; Uganda $13.1 million; Tanzania $7.3 million a year • Add to these the productivity loss just demonstrated Institute of Moscom Limited Infrastructure 24 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 25. Ready to Pay • • • • • • Some 950 respondent i.e. 67% of the sample were ready to pay Of these, PSVs form 45 per cent private cars/taxis 34% SUVs & Pick-ups 12% Others 19% All ready to pay directly to contractor Institute of Moscom Limited Infrastructure 25 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 26. Can Investors make Money • • • • • • Yes, Assumption; Only 67% of Motorist will pay Toll rates will be $0.27 in Kenya and $0.81 in Uganda and Tanzania The concession will last 25 years Historical MV growth rates will be maintained in the next 25 years Institute of Moscom Limited Infrastructure 26 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 27. MV Growth Rates • Kenya Historical growth rate is 4.8% per annum • Tanzania 5.5% per annum • Uganda 4.5% per annum Institute of Moscom Limited Infrastructure 27 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 28. Toll Collection • Will be collected by Non-stop, fully automated system • Transactions enabled by a 5.8 GHz microwave link between the Road –Side-Unit and the In-Vehicle-Unit on the windscreens Institute of Moscom Limited Infrastructure 28 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 29. Toll Collection • Provides subsystems for electronic transactions at the lanes, data collection, supervision, monitoring, violation, processing, toll clearance operations and reporting facilities Institute of Moscom Limited Infrastructure 29 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 30. System’s Architecture Institute of Moscom Limited Infrastructure 30 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 31. Toll Collection • Most effective for congested highways and bridges (100,000 vehicles and over) Institute of Moscom Limited Infrastructure 31 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 32. IRR @12% Discount Rate Assumption 67% paying • • • Jogoo Road: IRR Old Bagamoyo Road: Gayaaza Road: Institute of = = = Moscom Limited Infrastructure 32 31.2% 27.24% 27.10% Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 33. IRR @15% Discount Rate Assumption 67% paying • • • • Jogoo Road: IRR = 28.7% Old Bagamoyo Road: = 23.34% Gayaaza Road = 24.5% The rates are more robust at 80% motorist paying Institute of Moscom Limited Infrastructure 33 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 34. IRR 12@% Discount Rate Assumption 80% paying • • • Jogoo Road IRR Old Bagamioyo Road Gayaaza Road Institute of = = = Moscom Limited Infrastructure 34 38% 34% 37.4% Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 35. IRR 15@% Discount Rate Assumption 80% paying • • • Jogoo Road IRR Old Bagamioyo Road Gayaaza Road Institute of = = = Moscom Limited Infrastructure 35 33.30% 35.00% 29.4% Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 36. Risks • Motorists could choose free roads and avoid toll roads • Construction costs could escalate given the rapidly rising price of crude oil • Monopolistic tendencies on the part of the contractor Institute of Moscom Limited Infrastructure 36 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD
  • 37. Vote of Thanks I thank you all for coming and your keen interest Institute of Moscom Limited Infrastructure 37 Development Consultancy. Research. Education.Advocacy Economics Research and Consultancy ITEC ENGINEERING LTD