As the country continues to struggle with debt issues, Treasury Cabinet Secretary John Mbadi is now exploring ways of reducing over-reliance on credit to finance major infrastructure projects.

During a meeting with the International Finance Corporation (IFC) in Washington on Wednesday, October 23, 2024, CS Mbadi pitched the idea of exploring potential collaboration on Public-Private Partnerships (PPP) instead of securing credit for various projects.

CS Mbadi, who Treasury Principal Secretary Chris Kiptoo accompanied, explained that the PPPs are not wholly accepted in the country as the idea is still in the infancy stage.

“He emphasized the government’s goal of utilizing PPPs to shift the burden of major infrastructure projects off the government’s balance sheet, reducing reliance on exchequer funding or loan financing,” a statement shared by the National Treasury read in part.

Nairobi- Malaba Expressway

On his side, PS Kiptoo expressed keen interest in asset monetization, identifying the proposed expressway from Nairobi to Malaba, at the Kenya-Uganda border, as a prime opportunity.

“The Malaba expressway could significantly enhance trade and regional connectivity. Through a PPP arrangement, we can fast-track its construction and management without burdening the exchequer,” Kiptoo stated.

He emphasized the need for thorough risk assessment in PPP projects, ensuring they do not place undue strain on public finances.

“PPPs should be reserved for high-priority projects where the benefits clearly outweigh the risks,” he added.

CS Mbadi seconded Kiptoo’s views, welcoming IFC’s advisory support to ensure PPPs are well-structured to minimize risks. He also stressed the importance of public awareness around the PPP model to foster understanding and acceptance.

Both leaders reaffirmed the government’s commitment to pursuing innovative financing models that drive development without increasing public debt.

By partnering with IFC, the government aims to ensure that critical infrastructure projects, such as the Nairobi-Malaba expressway, are developed sustainably, leveraging private sector investment while safeguarding public finances.

IFC’s comments

During the meeting, the IFC explained that asset monetization allows the government to generate revenue from public assets without relinquishing ownership, thus alleviating pressure on the exchequer.

They also stressed the need for legal reforms to create an investor-friendly environment and a strong regulatory framework to ensure transparency and efficiency in PPP projects.