Public-private partnerships best bet for Kenya despite being expensive

Lamu Port has been constructed through public-private partnership. [File, Standard]

Public-private partnership denotes a long-term arrangement between government and private sector institutions. Usually, it entails the private sector financing government projects upfront, and then drawing revenues from users and taxpayers as the case may be, depending on the contract that will have been signed between the private entity and the government. These kind of arrangements have been undertaken by multiple countries across the world, and Kenya is not an exception.

The public-private partnership arrangement is primarily adopted for purposes of developing infrastructure projects such as building and maintaining of hospitals, transport systems, energy sector projects, and water and sewerage systems.

The arrangement is meant to bolster the private sector’s involvement in public projects administration where the government leverages on private sector financing and requisite sector-specific expertise.

Governments around the world have benefited from mutual partnerships with the private sector in undertaking big ticket and critical projects using the public private partnership method for financing public sector assets outside the realm of government’s subsisting fiscal structure.

Based on this method of financing, public-private projects are more expensive than direct public-resources financed projects, and this is occasioned by the private sector’s high cost of accessing the funds necessary for deploying in the projects. That consequently results in users and taxpayers footing extended costs while using the products or services in order to cater for the private entity’s high interest costs.

Kenya has embraced the public-private partnership arrangement by adopting various legislative frameworks which include the Public-Private Sector Act, 2013, which was revised in 2021 and is the anchor legal framework that governs the country’s public private partnerships, putting forth the design, implementation and oversight of the applicable projects.

Other complimentary legislation include the Public-Private Partnership Regulations Act of 2014 which details the guidelines on implementation of public-private sector projects, and also addresses procurement and contracting processes, and project evaluation.

The Infrastructure Act of 2013 provides a comprehensive framework for infrastructure development, and this encompasses public-private partnership projects. The Constitution, being the overriding source of law, requires that all public procurement be transparent and cost effective, and it applies for public-private partnership projects.

There are various public-private partnership projects that have been implemented successfully and these include but not limited to the Nairobi Expressway, the Nairobi Commuter Rail Project, Lamu Port Berths 1, 2 and 3, Lake Turkana Wind Power Project, Kenya Power Last Mile Connectivity Project, various Water and Sanitation Projects, Moi Teaching and Referral Hospital Refurbishment Project, University of Nairobi Purpose Built Student Accommodation Project and Kenya Defence Forces Residential Accommodation Project.

These projects are testament that public-private partnership framework works, and that is why the envisaged expansion and modernisation of Jomo Kenyatta International Airport, which recently ran into headwinds with the cancellation of Adani Group deal, would still be viable for partnership with other able entities which should be brought on board in a transparent manner especially with the apt involvement of specialist agencies such as the Public-Private Partnership Directorate, in addition to requisite public participation.

It is noteworthy that Kenya has a comprehensive legal and regulatory framework that guides public-private partnerships, but further reviews and updates to the legislative frameworks ought to be undertaken in earnest with attendant orientation to the current project management dynamics. That notwithstanding, the country remains on a good trajectory for public-private partnership maturity.