Investment inflows into public-private-partnership (PPP) projects in Kenya, have hit a cumulative Sh140.7 billion since the adoption of the financing model in the country in 2013, new disclosures showed.
The disclosure by the PPP Directorate of the National Treasury said the projects include the country’s first double-decker Nairobi Expressway which cost Sh88 billion and was completed in 2020.
Kenya turned to the PPP model in 2013 in a bid to deliver huge infrastructural projects without tapping Exchequer funds or incurring direct loans amid a ballooning debt burden.
In a PPP-funded project, the investor recoups investment by charging user fees over a defined period, for example, the Chinese firm that funded the construction of the Nairobi Expressway is charging toll fees on motorists who will be using the road up to 2047.
“Approximately Sh140.7 billion worth of private capital investments in PPPs has been mobilised to date. In 2023/24, Sh4.3 billion was mobilised and this is for the implementation of the Kenya Defense Forces (KDF) Residential Accommodation PPP project,” Christopher Kirigua, the Director General of the PPP Directorate said.
Besides construction of the residential homes for the KDF which started in June this year, other PPP-funded projects currently ongoing include the development of a 35-megawatt geothermal power plant by Quantum Power, which started in February this year.
Investors funding the KDF homes project will build and operate the project for 15 years to recoup their investment while Quantum Power will ink a power sale agreement with Kenya Power for at least 25 years to recover the capital investments made.
PPP funding for projects is critical in Kenya’s efforts to fund the upgrading of roads, boosting the generation of electricity, and enhancing access to water for all.
Kenya is currently grappling with mounting debt repayment obligations mainly to China, making it increasingly difficult to tap more loans for the projects.
Commercial loans mainly from China whose uptake peaked in 2013 funded grand projects such as the Standard Gauge Railway and the Nairobi-Thika superhighway.
Currently, there are 32 PPP-funded projects at various stages of approval as the country eyes to raise an additional Sh70 billion worth of private investor capital, via the model in the current financial year that ends in June 2025.
In 2021, Kenya amended the Public-Private Partnerships Act of 2013 in a bid to smoothen the process of onboarding private investors by reducing bureaucracies involved in finalising the deals.
The Public-Private Partnerships (Amendment) Act, 2021 repealed the previous Act of 2013, allowing public entities in PPP deals to single-source work in a bid to speed up projects.
Kenya had previously struggled to attract private investors in the PPP space under the Public Private Partnerships Act of 2013, prompting the legal changes that were signed into law by former President Uhuru Kenyatta.
