Pension schemes should join in public private partnerships (PPPs) projects through Infrastructure Debt Fund as senior debt providers not equity partners, World Bank has said. The multilateral bank says this will earn them more.
World Bank’s senior financial sector specialist Caroline Cerruti said infrastructure needs in Kenya are vast with need of about Sh400 billion ($4 billion) yearly, creating an opportunity for long-term institutional investors.
“Bank lending as a source of long-term financing is diminishing.
Given constraints of commercial banks to lend long-term to PPP projects, it makes sense for the government to search for long-term local currency financing for various infrastructure projects; this is an opportunity for pension schemes,” said Ms Cerruti.
There are about 67 projects in the pipeline which pension schemes can take part in, with the first five mover PPP road projects coming to the market in need of between Sh300 billion to Sh400 billion.
Figures from Retirement Benefits Authority (RBA) shows that as at end of 2017, pension schemes had asset worth of over Sh1.02 trillion.