The government is seeking to raise up to Sh293.6 billion this financial year to fund commercially viable projects through public-private partnerships (PPPs) as it navigates a tight fiscal environment.

Both domestic and international investors will participate in competitive bids for key projects, including the construction of 2,820 affordable housing units cross-subsidised with 200 market-rate units in Athi River and a 3,000-capacity tuition facility and accommodation for 800 students at Moi Teaching and Referral Hospital in Eldoret.

Also expected are a 4,000-student hostel at the University of Nairobi’s main campus, and a 2,000-bed hospital for Pwani Teaching and Referral Hospital in Kilifi. Speaking at a high-level symposium with the private sector in Nairobi on August 11, National Treasury Cabinet Secretary John Mbadi said PPPs present the ideal model for development in the face of shrinking fiscal space.

“We must also acknowledge a reality: public resources alone are not enough to meet our growing infrastructure demands,” he said.

He added that with Kenya’s borrowing space narrowing, the country must adopt innovative and sustainable financing mechanisms to meet its development needs. “When a government is able to foster a conducive environment for various sectors, including the economy, social development and environmental sustainability, such a government can be described as one that is succeeding,” the CS noted.

Additionally, Mbadi noted that this is the opportune time for PPP model as the country continues to face fiscal pressures especially from growing public debt and revenue performance.

“I am glad to note that Kenya is ready for PPP as an investment option. The country’s GDP is currently estimated at $ 124 billion while its installed energy capacity is 3,243MW including 79 per cent renewable energy,” he noted.

Pension fund

It was also during the event that he mentioned that Domestic capital pension fund stands at Sh2.25 trillion, banking sector Sh7.7 trillion and significant insurance and Sacco assets.

“We are determined to leverage this capital through pooled instruments to tap into the compelling opportunity for sustainable infrastructure financing in Kenya,” Mbadi asserted.

Currently the country has five ongoing PPP Projects worth Sh123.1 billion, according to Kefa Seda the director general for public private partnership at the national treasury.

He added that three key projects have already been approved and are already progressing while others are set to be rolled out from next month.

Among the projects include the Galana-Kulalu project, the ambitious agriculture project set on a 1.5 million acres of land with the entire project expected to catalyse approximately Sh46.2 billion with the tenure set for 30 years.

The other two projects are the Africa 50 power infrastructure project under Ketraco at an estimated cost of Sh41.6 billion with a tenure of 30 years and the Sabaki Water Project in Mombasa and Malindi which is expected to help produce up 80.000 cubic metres of drinking water daily. This specific project will cost Sh31 billion with contraction set for four years as the tenure is set to run for 20 years.

“Public–Private Partnerships are therefore not simply an alternative procurement model; they are a strategic imperative for Kenya’s development in a constrained fiscal environment,” he said.