Treasury sets up fundraiser team for PPP infrastructure projects

The National Treasury building in Nairobi, Kenya.

Photo credit: File | Nation Media Group

The National Treasury has set up a committee of experts to explore and recommend viable ways of mobilising long-term funds from the local capital markets to finance the government’s infrastructure projects under the public-private partnership (PPP) arrangement.

The committee, chaired by Hosea Kili, the Group Managing Director of CPF Group and President of the Association of Pension Trustees and Administrators of Kenya (APTAK), comprises leading professionals in finance, investment, infrastructure, and capital markets. Mr Kili will be deputised by Tom Mulwa, the chief executive officer of Liaison Group.

The committee has been tasked with reviewing existing regulations, deal structures, and the capacity of local financial markets to enhance private sector investment in key infrastructure projects while also identifying priority PPP initiatives for private sector financing, including flagship projects such as the expansion of the Jomo Kenyatta International Airport (JKIA) airfield and the Nairobi-Nakuru-Mau Summit Highway.

Kenya’s pension industry with an asset base of Sh2 trillion and life insurance sector with assets totaling Sh500 billion, have been identified as critical sources of capital for infrastructure development.

By tapping into investments by these sectors, the government aims to reduce reliance on loans and embrace sustainable financing solutions, while at the same time promoting local institutional investors.

However, the current investment regulations by the Retirement Benefits Authority 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 allowed.

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 , commercial papers, and East African Community government securities and infrastructure bonds.

“The formation of this committee is a significant step in fostering partnerships that leverage local financial markets to drive infrastructure development. Mobilizing domestic capital ensures sustainable financing and reduces dependency on external borrowing,” said Dr. Kiptoo.

Dr. Kili reiterated the private sector's pivotal role in advancing Kenya’s infrastructure agenda.

“This initiative reflects the potential of Kenya’s financial markets in unlocking long-term capital for transformative projects. By aligning with Vision 2030, we are creating a roadmap for sustainable partnerships to accelerate economic growth,” he said.

The committee will also explore innovative financing solutions such as infrastructure bonds to attract private sector participation in PPP projects.

Treasury Cabinet Secretary John Mbadi directed his Principal Secretary Chris Kiptoo in December last year 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.

Mr Mbadi’s directive came on the back 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 in November last year 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.

The President ordered the Ministry of Transport and Energy to cancel the proposed agreement with the Adani group to expand and run JKIA for 30 years and the deal with the state utility Ketraco to build and operate power infrastructure including power lines.

The Adani Group was set to invest $1.85 billion (Sh238.65 billion) in Kenya's main airport in exchange for a contract to run it for 30 years, as well as a $736 million (Sh94.94 billion) deal with the energy ministry to construct power lines.

Ruto said the deals had been cancelled based on "new information provided by our investigative agencies and partner nations", which included allegations that Gautam paid $265 million (Sh34.18 billion) in bribes to Indian government officials.

These deals with the Adani group were hugely unpopular in the country with concerns of corruption.

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