Kenya seeks to raise Sh1.8tr for infrastructure

NAIROBI: The Government is looking to raise Sh1.8 trillion through the public-private partnership framework to fund 69 projects.

According to the PPP Unit of the National Treasury, the funds will be sourced from local and foreign investors, and will be channeled towards planned projects in the transport, energy, education, water and sanitation, and health sectors.

PPP Unit Director Stanley Kamau said the money at the Government’s disposal is not enough to implement all infrastructure development plans.

The Second Medium Term Plan (MTP II) estimates the country’s infrastructure spending need at $4 billion (Sh376.6 billion) per year, but faces a deficit of between $2 billion to $3 billion (Sh188.3 billion to Sh282.5 billion).

Kamau said the PPP model is expected to help bridge this gap.

“Kenya needs infrastructure fast to achieve Vision 2030, and PPP is the way to go. The 69 projects already identified are at different levels of implementation,” said Mr Kamau at a PPP media workshop last week.

“The advantage of PPPs is that the private sector will come in, put in their money and recover it within years.”

Statistics from the Treasury indicate that in the last five years, Kenya has, on average, been operating on a Budget deficit of 4.9 per cent of gross domestic product (GDP).

Kenya cannot, therefore, rely on foreign borrowing to fund its infrastructure projects because the country would run the risk of increasing its debt to more than 50 per cent of GDP, which would scare away investors, added Kamau.

“We cannot go back to taxes to finance our infrastructure projects. It is time to use PPPs to propel growth in Kenya,” he said.

“For example, the Government is only able to finance construction of 250 to 300 kilometres of roads annually from tax revenues. However, with PPP, we hope to complete at least 10,000 kilometres in the next five years.”

The priority infrastructure projects include construction of power stations, the road annuity programme and five toll roads.

“By giving the transport and energy sectors priority, revenues will go up and the economy will start growing at more than 10 per cent. The benefits accruing to the growth can be translated to the social sector,” explained Kamau.

Social projects include those that do not necessarily generate revenue, and include construction of 10,000 housing units for civil servants and 130,000 police and prisons service housing units, expansion of public hospitals and construction of more university hostels.

PRIORITY PROJECTS

Some of the benefits of using the PPP framework include acceleration of a larger pipeline of infrastructure investments, reduction of Government sovereign borrowing, increased efficiency of public services, availability of modern technology and enhanced project design and implementation.

Others are efficient use of resources, building domestic expertise, and improved operations, accountability and service standards.

The PPP workshop is part of a series of capacity building programmes aimed at sensitising relevant stakeholders on the PPP approach to delivering infrastructure projects.