Socio-economic impacts of transport infrastructure investment in Uganda: Insight from frontloading expenditure on Uganda's urban roads and highways

Abstract

BackgroundThe relationship between transport infrastructure and economic growth has remained one of the most striking expanses from the perspectives of economists, researchers as well as policy makers. This paper therefore has examined the impact of road transport infrastructure investment on Uganda's economic performance and also quantified the economic costs associated with inefficient urban road transport infrastructure network for the case of Uganda. The paper utilizes a rich econometric methodology involving the Auto Regressive Distributed Lag (ARDL) to estimate the impact of road transport infrastructure and economic growth as well as traffic counts of travel East bound (EB) and West Bound (WB) for the major roads leading to Kampala Capital City to estimate the generalized cost of travel as the city represents more than 70% of the total national vehicle traffic/population. The quantification of gains and costs provided a benchmark to inform further policy processes, planning, and feasibility studies. ResultsThe ARDL bound test results confirmed the existence cointegration of variables although the variables were integrated of different orders. The results of empirical ARDL indicated that investment in road transport infrastructure has both short and long run significant impact on economic growth of Uganda. In the long run, the study finds that investment in road transport infrastructure has a positive and significant impact on economic growth. But in the short run, the impact is actually negative. The paper finds that, a 1 percentage point increase in investment in road transport infrastructure increases economic growth by 0.062 percentage points in the long run. On the other hand, a 1 percentage point increase in investment in road transport infrastructure reduces economic growth in the 1st year of the increase in the expenditure by 0.089 percentage points but (Gross Domestic Product) GDP increases by 7.5 percentage points in the second year. This implies that, the impact of road transport infrastructure investment on economic growth occurs with lags for the case of Uganda. Evidence also justifies presence of significant economic benefits due to massive investments in the urban transport infrastructure network through express highways and associated roads especially within the Greater Kampala Metropolitan Area, municipal authorities and future transport planning for new cities. ConclusionThe main conclusion of this paper is that, with the current state of traffic flow, the country loses about 6.7% of its GDP due to traffic congestion annually. Therefore, projects such as; Kampala flyover project, Entebbe Express Highway, Southern Bypass, Northern Bypass, Kampala Bombo Express Highway, Kampala Jinja Express Highway and Kibuye Mpigi Express highway together with associated urban roads improvements that are planned for seamless flow of traffic within the Greater Kampala Metropolitan Area (GKMA) are highly justified. These projects should be prioritized, fast-tracked and developed in a concurrent manner to realize the intended results. Further, the negative short run impact of infrastructure spending on growth implies the need to rebalance public spending to also prioritize social sectors.