East Africa is urbanising rapidly, and the economic role of its cities is expanding with it. Across Kenya, Tanzania, Rwanda, Uganda and Burundi, growing urban populations are increasing demand for roads, public transport, drainage, electricity, water and sanitation, commercial space and serviced land. Governments are responding through a combination of national investment, multilateral development finance, bilateral support and, increasingly, PPPs and private capital.
The economic importance of these investments goes beyond improving urban living conditions. Infrastructure changes the economics of operating in a city. Better roads and public transport enlarge the area from which firms can recruit workers and reach customers; reliable electricity and water reduce interruptions and operating costs; drainage and flood protection reduce the risk of asset damage; and serviced land can shorten the time and cost required to establish new facilities. Infrastructure does not determine investment decisions on its own, but it can materially alter the costs, risks and commercial opportunities attached to a particular location.
This is particularly important in Africa, where rapid urbanisation does not automatically translate into higher productivity. UN-Habitat’s State of African Cities Report 2026 argues that strategic investment in infrastructure, services and urban land can create a “virtuous cycle” in which better-connected and more productive cities generate stronger economic activity, higher revenues and further investment. The report estimates that more than half of the infrastructure that Africa’s future cities will need has yet to be built, making present-day infrastructure decisions especially consequential.
The five East African countries considered here illustrate different stages of this process. Kenya is trying to strengthen the connectivity of an established regional business hub. Tanzania is investing heavily in mobility and logistics around rapidly expanding cities. Rwanda is using planned urban infrastructure partly to offset the disadvantages of a small, landlocked economy. Uganda is trying to ensure that rapid economic and population growth is not constrained by weak metropolitan infrastructure. Burundi is still addressing more fundamental issues of infrastructure reliability and resilience.
Kenya: reinforcing the advantages of a regional business hub
Kenya has the most diversified urban business ecosystem among the five countries. Nairobi combines finance, technology, multinational headquarters, professional services, manufacturing and international connectivity, while Mombasa, Kisumu, Nakuru and Eldoret serve important regional markets. The challenge is increasingly to ensure that transport and municipal infrastructure do not become constraints on an already dense concentration of economic activity.
Between 2017 and 2023, the Kenya Urban Support Program financed roads, drainage, markets, bus parks, public lighting and pedestrian infrastructure in municipalities outside Nairobi. The programme benefited around 3.6 million urban residents and helped municipalities build both physical infrastructure and institutional capacity. For investment, the significance of these smaller-scale projects lies in their ability to improve commercial locations outside the capital: markets become easier to access, local transport costs fall and municipalities can generate more economic activity around serviced urban centres.
In Nairobi, transport investments demonstrate the link more directly. The African Development Bank approved the Nairobi Outer Ring Road Improvement Project in 2013. The 13-kilometre corridor connects some of the city’s most densely populated areas with industrial zones, Thika Road, Mombasa Road and secondary access to Jomo Kenyatta International Airport. AfDB’s evaluation highlighted the project’s role in improving access to businesses and reducing congestion along a corridor that had previously imposed significant time and revenue losses on firms and commuters.
The 27.1-kilometre Nairobi Expressway, operational since 2022, addresses another economically important connection by improving access between central and western Nairobi, Mombasa Road and the airport corridor. Its PPP structure, involving China Road and Bridge Corporation, also shows that Nairobi has reached a stage where selected transport assets can attract commercially structured finance rather than relying exclusively on sovereign or concessional funding.
Recent investment is moving increasingly towards project preparation and climate resilience. In March 2025, EIB Global provided technical assistance to Kericho, Nyamira, Kisumu, Embu, Eldoret and Malindi to prepare investments in wastewater, solid waste, flood resilience and related municipal infrastructure. The programme explicitly targets a common bottleneck: cities may know what infrastructure they need but lack sufficiently prepared projects to attract international public or private finance.
For Kenya, the investment effect is therefore mainly about reinforcing agglomeration. Nairobi already has firms, workers, suppliers and customers in close proximity. Better infrastructure makes those concentrations more economically useful by shortening journeys between residential areas, industrial zones, airports and commercial centres. Infrastructure helps preserve Nairobi’s regional-hub advantage, although recent debate over restrictions on foreign participation in small-scale retail also demonstrates that physical connectivity needs to be accompanied by regulatory predictability.
Tanzania: expanding the effective size of urban markets
Tanzania faces a different challenge. Dar es Salaam has become one of Africa’s largest and fastest-growing metropolitan economies, while Dodoma is expanding rapidly following the transfer of national government functions from Dar es Salaam, which accelerated from 2020 onwards.
Between 2015 and 2023, the World Bank-supported Dar es Salaam Metropolitan Development Project delivered 207 kilometres of roads, together with street lighting, sidewalks, drainage, upgraded markets, public spaces and services in low-income areas. More than four million people benefited. These investments addressed congestion and flooding but also improved connections between residential districts, employment centres and commercial activity.
Dar es Salaam’s Bus Rapid Transit system provides an even clearer example of how infrastructure can change the investment geography of a city. World Bank analysis found that the share of locations and services accessible within 60 minutes by public transport increased from approximately 42% to 73% after BRT development. For a business, this means more than faster commuting. A larger share of the metropolitan population can realistically reach a workplace within an acceptable journey time, effectively increasing the labour market available to employers.
The system is continuing to expand. In August 2026, the Government of Tanzania and the African Development Bank launched BRT Phase II along the Kilwa Road corridor, with dedicated bus infrastructure and related improvements designed to reduce congestion and improve access to businesses and services. In September 2025, the European Investment Bank approved approximately €201 million for BRT Lines 4 and 5 as part of an estimated €688 million investment being developed together with AFD and the World Bank.
Japan is supporting the parallel expansion of Dodoma. In October 2024, JICA signed a grant agreement of up to ¥4.07 billion for the Dodoma City Inner Ring Road. The city’s population had increased sharply following the transfer of government functions, while traffic through its centre was projected to roughly double over the decade from 2019. The project will divert heavy traffic from central areas and improve the movement of vehicles through the expanding capital.
Tanzania also shows why urban and national infrastructure cannot be considered separately. Dar es Salaam’s commercial importance depends heavily on its port and on road and rail corridors connecting the city to inland Tanzania and neighbouring landlocked economies. Urban transport determines how efficiently workers and goods circulate inside the metropolitan area, while ports and regional corridors determine how efficiently firms reach external markets. Together, these investments affect the logistics costs that manufacturers, exporters, retailers and logistics operators face when locating in Dar es Salaam.
Rwanda: reducing the disadvantages of a small, landlocked economy
Rwanda starts from a different economic position. It has a relatively small domestic market and no maritime access, which increases the importance of connectivity, institutional efficiency and the quality of the urban environment. Kigali’s infrastructure is therefore relevant not only to residents but to Rwanda’s wider effort to present itself as an efficient location for business and regional services.
The Second Rwanda Urban Development Project, approved in 2020, provides US$150 million for infrastructure, urban planning and resilience in Kigali and six other cities. A distinctive element is Kigali’s wetland rehabilitation, which combines flood management, environmental restoration and public-space improvements. In investment terms, flood resilience matters because it reduces expected disruption and potential asset losses in areas exposed to increasingly severe climate risks.
Transport constraints are also becoming more important as Kigali grows. In December 2024, the African Development Bank approved a US$100 million loan for the Kigali Urban Transport Improvement Project. AfDB identified congestion and long queues at major junctions as sources of higher operating costs and travel times; the project targets key bottlenecks and includes public transport, pedestrian and road-safety infrastructure. Kigali’s population, currently around 1.7 million, is projected by AfDB to reach 3.8 million by 2050.
Project preparation is becoming another part of Rwanda’s strategy. In June 2025, AfDB approved a US$500,000 feasibility grant for the first phase of a proposed 5.5-kilometre Kigali cable-car system, estimated at around US$100 million. The proposal aims to connect major activity centres and underserved communities to jobs and services. The important point at this stage is not whether the cable car is ultimately built, but that feasibility and financial structuring are being undertaken before large-scale capital is committed.
China is also financing major urban roads. In September 2026, Rwanda launched expansion of the Prince House-Giporoso-Masaka corridor with Chinese government grant support. Together, these projects show how Rwanda is combining resilience, mobility and land-use planning within a centrally coordinated infrastructure strategy.
For investors, the effect is cumulative. Kigali cannot change Rwanda’s landlocked geography, but better urban mobility, lower flood exposure, predictable development and improved connections between employment centres can reduce some of the operational disadvantages associated with that geography. In this sense, urban quality itself becomes part of Rwanda’s economic proposition.
Uganda: improving the capacity of cities to absorb investment
Uganda’s urban economy is strongly concentrated in Greater Kampala, where population growth and commercial expansion have outpaced transport, drainage and municipal infrastructure. Here, the infrastructure question is not only how to attract new investment but whether the city can absorb existing and future investment efficiently.
On 20 June 2025, Kampala Capital City Authority launched UGX149 billion of reconstruction covering 15 roads and almost 20 kilometres across the city’s five divisions. The works, co-financed by the Government of Uganda and the World Bank, address roads that had suffered from potholes, inadequate drainage and chronic bottlenecks.
The scale of urban investment increased further in March 2026, when the World Bank approved US$540 million for the six-year Uganda Cities and Municipalities Infrastructure Development programme. It covers 10 cities, 26 municipalities and 13 refugee-hosting districts and is expected to benefit 5.6 million people through roads, stormwater drainage, public lighting, markets and other facilities.
AfDB and Japan are also important in Kampala’s transport system. AfDB-supported road rehabilitation combines road reconstruction with drainage and safety improvements, while JICA’s Kampala Flyover and Road Upgrading programme has addressed some of the most congested central-city junctions through flyovers, road widening and traffic-management improvements.
The investment impact in Uganda differs somewhat from Kenya’s. Kampala already sits at the centre of a country receiving large investments in energy, oil and regional infrastructure. The key question is whether domestic firms, workers and service providers can connect efficiently to the economic activity these investments generate. If congestion prevents employees from reaching jobs reliably or raises the cost of moving goods across Kampala, part of the potential local spillover is lost. Urban infrastructure therefore affects Uganda’s capacity to translate major national investments into broader business activity and employment.
Burundi: reducing basic operational risk
Burundi illustrates the most fundamental infrastructure-investment relationship among the five countries. In Bujumbura, the immediate issues are not sophisticated agglomeration effects but the reliability of basic infrastructure: whether roads remain accessible, electricity is available and businesses are protected from recurrent flooding.
The World Bank approved the US$113 million Urban Resilience Emergency Project in July 2024 following severe flooding and rising water levels in Lake Tanganyika. The programme finances drainage, river rehabilitation, flood protection, early-warning systems and protection of critical infrastructure, with more than 200,000 people directly affected by the emergency that prompted the project.
The African Development Bank, European Union and Government of Burundi are also rehabilitating the Port of Bujumbura and associated urban roads. By 2025, works were under implementation under a project valued at approximately €45 million. The port is economically important because it links Burundi through Lake Tanganyika with Tanzania, Zambia and the Democratic Republic of Congo, giving a landlocked economy an alternative trade route.
Electricity reliability is another constraint. In February 2026, the EIB approved approximately €65 million towards a €169 million programme to rehabilitate, modernise and expand electricity distribution in Bujumbura and surrounding areas. The project includes network modernisation, remote-control systems and expansion into peripheral districts.
For investors, these projects reduce fundamental operating risks. Flooding can close roads and damage assets; unreliable electricity forces firms to invest in backup generation; poor regional connectivity increases transport costs. Burundi therefore demonstrates that before infrastructure can attract sophisticated new investment, it often has to establish the minimum level of reliability required for businesses to operate at all.
From infrastructure investment to an investable city
The five cases show that infrastructure influences investment through several distinct channels. In Nairobi, transport improves connections within an already dense business ecosystem. In Dar es Salaam, BRT expands the effective labour market while port and regional transport links strengthen logistics. Kigali uses mobility and resilience to reduce some disadvantages associated with being a small, landlocked economy. Kampala needs infrastructure to convert major national investments into broader urban economic activity. Bujumbura is still reducing basic operational and climate risks.
Infrastructure can also change the economics of land. A poorly connected parcel on the urban periphery may have limited commercial value; the same site can become suitable for housing, logistics, retail or industrial development once roads, public transport, electricity, water and planning access are provided. UN-Habitat’s 2026 analysis places this relationship between infrastructure and urban land at the centre of African city development and argues that rising land values can, where appropriate institutions exist, be partly captured to finance further urban investment.
The relationship is therefore better understood as a chain rather than a simple claim that more infrastructure automatically produces more foreign investment: better infrastructure → improved accessibility and reliability → lower costs and risks → more productive urban locations → stronger conditions for business investment.
Regulation, market size, skills, political stability and macroeconomic conditions remain critical throughout this process. Infrastructure strengthens an investment proposition when it complements those factors rather than substitutes for them.
The next challenge: preparing projects around economic outcomes
East African cities generally know where their infrastructure deficits are. The more difficult task is turning those needs into projects capable of attracting appropriate finance. A proposed road, drainage system or transport project needs more than an engineering design: financiers increasingly require evidence of demand, economic benefits, environmental and social viability, implementation capacity and a credible financing structure.
The financing model will also depend on the economic characteristics of the asset. Flood protection and drainage generally require public or concessional finance because their benefits are widespread but difficult to monetise directly. Urban transport may combine sovereign borrowing, development finance and, in some circumstances, private participation. Energy networks, serviced land and selected commercial infrastructure can offer stronger possibilities for blended or private finance.
Recent programmes increasingly focus on this preparation gap. The EIB initiative launched in March 2025 for East African cities explicitly helps municipalities move climate projects from early concepts towards investment-ready proposals, while AfDB’s 2025 support for Kigali’s proposed cable car begins with feasibility and financial structuring before any decision on full-scale financing.
The objective should therefore not be infrastructure investment for its own sake. A strong urban project should be able to demonstrate what economic constraint it removes: how many more workers can reach employment areas, how much travel or logistics time can be reduced, what land can be unlocked for development, what business losses can be avoided through resilience investment, or what new connections to regional markets can be created.
For East African cities, this is where infrastructure planning and investment attraction increasingly converge. Cities that can identify these economic effects, translate them into well-prepared projects and match those projects with appropriate finance will be better positioned to convert rapid urban growth into productive investment and long-term economic development.