Discussion Paper No. 363 of 2024 on Role of Rural Road Infrastructure on Agricultural Productivity in Kenya

Abstract

This study investigates the implications of rural road infrastructure on agricultural productivity in Kenya, emphasizing the role that effective transportation networks play in facilitating market access for farmers. Given that agriculture constitutes approximately 25 per cent of Kenya’s Gross Domestic Product and employs around 70 per cent of the total labour force, either directly or indirectly, enhancing rural road infrastructure is vital for improving productivity and reducing poverty. The current state of rural roads, with only 16 per cent paved and significant disparities across counties, is one of the major factors that hinder agricultural productivity and rural livelihoods. High transportation costs, reduced farming output, and income instability are major challenges, highlighting the need for robust road networks to drive economic growth. The study reveals key findings with significant policy implications. First, a 1.0 per cent improvement in rural road infrastructure is associated with a 2.9 per cent increase in agricultural productivity, while improved road access contributes an additional 1.26 per cent boost. The analysis also reveals a notably strong relationship between capital stock and agricultural productivity—a 10 per cent increase in capital stock is associated with an approximate 3.0 per cent rise in productivity. Moreover, the interaction between aridity and road development shows a positive coefficient of 1.327, suggesting that improvements in road infrastructure could yield greater productivity gains in arid regions. Lastly, climate variability, particularly rainfall, significantly impacts agricultural success, underscoring the need for climate-resilient road infrastructure. Based on these findings, the study recommends prioritizing investments in rural road infrastructure to enhance agricultural productivity. The national and county governments could focus on improving road quality and coverage, especially in areas with high agricultural potential and arid regions, where infrastructure enhancements can yield significant productivity gains. Furthermore, facilitating access to credit and financial services would enhance capital stock. The study also emphasizes implementing measures to manage climate variability, such as promoting drought-resistant crops and improving irrigation systems. Addressing the infrastructure gaps can lead to substantial improvements in agricultural performance and rural livelihoods throughout Kenya