Question

The government of Kenya embarks on railway modernization project for the entire network with foreign development bank finance assistance. ( Discuss, 50 marks)

Answer 1

Kenya is a small country in East Africa which is a key exporter of coffee in the world which is relatively high in demand. The recent years have seen rapid development in the area with government extending its arms and the country growing at a stable and steady rate of about 5% every year.

The need for a robust mechanism of railways arises from the fact that people want to travel places in order to get better opportunities for themselves. And railways brings with it the capacity to transport goods at a relatively cheaper rate than traditional roadways.

Historically Kenya has seen extremely tough times with problems of slow growth, unemployment and nutritional problems among children being widespread.

To finance the project, the Kenyan government is taking the help of the foreign development bank which in my opinion is an extremely positive step to modernize the country and bring in more investment and to ensure that transportation problems can be solved at effective rates.

The overall modernization process costs a lot and takes a toll on government spending on other critical items. Usually, the foreign banks offer loans at nominal interest rates which are payable over a wider time span. The difference in interest rates is what keeps government in business when it takes loans from international banks.

The World Bank for an example is the pioneer of technological innovation and capacity increase in areas such as India and other South Asian countries which have seen major development because of this happening.

Further, the Kenyan government would largely see benefits over the years once the railway modernization has been completed, by ensuring that every city is interconnected and that goods can reach from one place to another at a relatively justifiable rate and thus increasing the total Gross Domestic Product of the nation respectively.

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