Government turns to private sector for project funding

By Ben Kinyanjui

Kenya requires an estimated Sh4, 400 billion for infrastructure development in the next eight years, Treasury PS Joseph Kinyua has said.

Already the government is seeking a Sh6 billion loan from the international money market to fund projects in roads, energy and water during this year.

“The Kenya Vision 2030 has identified the private sector as key towards reducing the infrastructure deficit and to deliver high quality service to the Kenyan citizens,” Kinyua told participates in a workshop on Public Private Partnership (PPP) in Nairobi Monday.

“It is currently estimated that there is a funding gap of approximately US$44 Billion that is needed to address the infrastructure requirements in the next 5 to 8 years.”

He said the PPP arrangement offer an opportunity for Kenya to attract enhanced private sector participation in financing, building and operating infrastructure services and facilities in order to close this huge funding gap.

According to Kinyua, the scope of PPPs is expected to cover both economic infrastructure including power generation, ports, airports, railway, roads, water supply, irrigation.

Projects in the social infrastructure will include housing, medical facilities, education facilities, prisons, solid waste management.

“The types of PPP arrangements will include long term management contracts, leases, concessions, Build-Operate-and-Transfer (BOT), Build-Own-Operate (BOO), Rehabilitate-Operate-and-Transfer (ROT), amongst other arrangements approved by the government,” said Kinyua. 

However, a robust legal and regulatory framework must be in place before the private sector can commit such huge amount of money in project that offer public goods.

The PS said the Government has over the past been committed to improve and strengthen the environment for private sector participation and has passed or amended a number of legislations to accommodate private sector participation in various sectors.

These include the enactment of Water Act of 2002, Privatization Act of 2005, Energy Act of 2006 and amendment of Public Road Act.