Impact Of Incremental Infrastructure On Economic Development Of County Governments In Kenya

Abstract

Investments are essential for the efficient functioning of the economy. The need for a large part of government investment stems from the fact that some goods and services cannot be provided at all by a market economy and some may not be provided adequately. This has aroused the interest of many economists in determining the extent to which infrastructure development affects economic performance. The people of Kenya clamored for a new constitution to promote equitable distribution of national resources and end development inequality between regions of the country. With the onset of devolution in 2013, Counties embarked on infrastructure development of roads, waterworks, public health facilities, affordable housing among other projects to spur pecuniary progress. The aim of the study was to examine the effects of incremental infrastructure on the economic development of County governments in Kenya. The study was based mainly on the fact that huge investments have been made in infrastructure, and it is important to assess the influence of infrastructure investments on the economic advancement of Kenyan Counties. The study’s data was collected from the 47 Kenyan between 2015 and 2018. Data was analyzed using descriptive statistical tools statistics, correlation and the Prais-Winsten regression analysis. The findings revealed that transport infrastructure, water and sanitation infrastructure and social infrastructure had significant and positive correlation with economic development of county governments in Kenya. Regression findings revealed that transport infrastructure had a positive (B=0.0276746) but insignificant (P value = 0.707>0.05) relationship with economic development (GCP) county governments in Kenya. The finding also revealed water and sanitation infrastructure had a positive (B=0.0547272) and significant (P value=0.022<0.05) relationship with economic development (GCP) county governments in Kenya. Lastly, the findings indicate that social infrastructure had a positive (B=0.0877086) and significant (P-value=0.013<0.05) relationship with economic development (GCP) county governments in Kenya. The study concluded that water and sanitation infrastructure and social infrastructure positively and significantly affected economic development (GCP) county governments in Kenya. The study recommended that county governments should allocate more resources to transport, water and sanitation as well as social infrastructures in order to enhance the counties economic development. The study also recommended an additional research on the effect of other type of infrastructures apart from transport, water and sanitation and social infrastructures to determine their effects on counties economic development. But of concern to Kenyans is the issue of overreliance by County government on National government to finance county functions. Despite ICT Policies and other reforms put in place by the Central Government to improve the capability of devolved units to transfer and exchange information, making them more accessible to citizens and to improve service provision, promote productivity among public servants; encourage participation of citizens in government; and to empower all Kenyans in line with development priorities outlined in the Vision 2030. The report for the year 2015 from Commission on Revenue Allocation revealed worrisome trends especially for the marginalized areas. Most of the marginalized counties collected Revenues which was less than four percent of their total budgets hence we may not achieve Vision 2030 priorities. Most of these Counties are facing a number of challenges in realizing their mandate. The challenges included: delivery of infrastructure and health services, financial management, human resource capacity and managing rapid population growth. These challenges had resulted in poor service provision and management and many analysts had criticized the capacity of Counties to deliver on their mandate. Because of inability of the counties to collect revenues optimally this study recommend that central government increase the county funding to 35% and above.