The National Treasury is setting up a committee of experts to examine ways of leveraging the Sh2.5 trillion worth of savings from the pension and insurance sectors to finance the government’s infrastructure projects under the Public Private Partnerships (PPP) arrangement after the collapse of deals by the Indian Billionaire Gautam Adani in the road and energy sectors on allegations of corruption.
Treasury Cabinet Secretary John Mbadi directed his principal secretary Chris Kiptoo on Wednesday to constitute a committee of experts (excluding politicians) to agree on viable ways of utilising insurance and pension funds to support sustainable and commercially viable government infrastructure projects to reduce reliance on bank borrowing and external borrowings.
The committee is expected to report back its findings to the National Treasury by March 31, 2025, he added.
“I’m hereby directing the Principal Secretary (PS) Treasury to convene a team of experts and not politicians to look at how we can leverage savings from pension and insurance sectors to finance PPP projects. That team will report back on March 31 2025,” Mr Mbadi told an annual general meeting (AGM) of the Public Service Superannuation Fund (PSSF) in Nairobi.
“We must look for ways of running away from going outside the country to look for money. The CS National Treasury should not be going to Washington to look for money.”
However, the current investment regulations by the Retirement Benefits Authority (RBA) do not provide for investments in government infrastructure projects save for investments (10 percent) in debt instruments for the financing of infrastructure or affordable housing projects approved under the PPP Act, 2013 or as may be prescribed by the Cabinet Secretary responsible for matters relating to housing that is allow
The rules specify limits for investment of retirement funds in asset classes including cash and demand deposits, fixed deposits, corporate bonds, mortgage bonds, collective investment schemes (CIS), commercial papers and East African Community (EAC) government securities and infrastructure bonds.
Mr Mbadi’s directive comes on the backdrop of a public outcry on the apparent lack of transparency and effective due diligence surrounding the PPP contracts crafted by State officers exposing taxpayers to possible losses of billions of shillings through dubious deals.
President William Ruto last month yielded to public pressure to order the cancellation of two major deals involving Indian conglomerate the Adani group after its Proprietor Gautam Adani was indicted for fraud by US prosecutors.
Pension funds and the life insurance sector hold in excess of Sh2 trillion and Sh500 billion of assets under management respectively, with significant portions of these funds being invested in government securities.
