Encourage Public Private Partnerships to develop infrastructure in Africa, urges Uhuru Kenyatta

By Ben Kinyanjui

The Government will reach out to the private sector to fund some of the infrastructure projects like roads and energy generation, Finance Minister Uhuru Kenyatta has said.Finance minister Uhuru Kenyatta says more money needed for infrastructure

Addressing the third African Public Private Partnership Conference in Nairobi, Mr Uhuru said demand for infrastructure was overwhelming and the government is no longer able to meet the entire financing needs.

“There is currently a growing demand for the use of Public Private Partnership (PPP) because of the global infrastructure deficit whose financing cannot be met by the public sector alone and especially in Africa,” said the minister.

.”To meet this unsatisfied demand, Public Private Partnerships have become a widely recognised and crucial tool for both physical and social infrastructure development.”

He said lack of adequate and efficient infrastructure in Africa is recognized as one of the greatest impediments to growth and economic development in Africa where poor connectivity has hampered trade and investment.

He said over the last ten years, the government had focused on infrastructure development and had prioritized infrastructure spending in successive budgets by allocating approximately seven percent of total budgetary expenditure.

However, much of the money had been channeled to road rehabilitation and construction of new roads, energy, water, railways and airports.

“These efforts have resulted in tremendous progress in infrastructure development in our country. But we still have a long way to go,” he said.

However, the country is yet to make much progress in attracting private participation especially in the roads subsector with the first attempt to concession part of Mombasa-Busia road collapsing due to misunderstanding between the bidding consortium.

The World Bank that was backing the group withdraw from financing the Sh67 billion Mombasa Road, Toll Road (NTR) project, over claims of non-compliance with key procedures in planning.

Among the issues raised by the bank included integrity and the land acquisition process.

It, however, said it would review the position on condition that Strabag, the main contractor, agrees to expand its integrity compliance procedures.

"Any World Bank Group support for a road construction project in Kenya would need to comply with the Bank’s social and environmental safeguards as well as Kenyan law, including for any land acquisition," said Country Director, Johannes Zutt.

Among the outstanding issues was the proposed acquisition of land adjacent to the road for further expansion with Government developing cold feet due to pressure from investors operating in the area.

Speakers during the conference said PPP projects were very complex and required full support from the Government in order to succeed. South Africa is one of the most successful countries in Africa in implementing PPPs.

“Public Private Partnership projects can be complex in nature in terms of preparation, procurement and structure. PPPs should therefore be prepared professionally to ensure that in all the cases, they demonstrate value for money and are affordable to both the Government and the user while providing a reasonable return to investors,” said Uhuru.

He said the government had developed a Public Private Partnership policy that articulates its commitment to the PPP agenda, providing the basis for an improved legal framework and the foundation for the institutions necessary to support delivery of a sustainable PPP programme.

It had also set to provide a legal and regulatory framework for PPP arrangements that is consistent with international best practice.

“While the current legal regime is not restrictive, it has been found necessary to strengthen it by enacting a Public Private Partnership Law which will provide more certainty and confidence to investors,” he assured.