Following the cancellation of the proposed Public-Private Partnership (PPP) with the Adani Group of Companies, the government, grappling with funding challenges for its development projects, has initiated a process to secure local development partners through PPP arrangements.
On Wednesday, the Treasury announced that it had presided over the formation of a private sector-led committee of experts to explore ways of mobilising long-term capital from Kenya's local financial markets to fund Public-Private Partnership (PPP) projects.
The meeting, held at the Treasury buildings in Nairobi, was chaired by Principal Secretary for Treasury, Chris Kiptoo.
According to the Treasury, the committee will comprise key industry players from the private sector, with whom the government aims to collaborate in raising the necessary capital to finance development projects.
The committee will bring together professionals in finance, investment, infrastructure, and capital markets according to the Treasury.
''The committee, chaired by Dr Hosea Kili (President of APTAK) and Vice-Chaired by Mr Tom Mulwa (CEO, of Liaison Group), brings together professionals in finance, investment, infrastructure, and capital markets,'' the Treasury shared in a statement.
Going forward, the committee will embark on a 3-month mandate to review regulations and deal structures within the local markets to enhance investment in the key projects.
Additionally, the committee will help the government to enhance the capacity within the local markets to identify the viability of the PPPs.
The government is also grappling with fiscal challenges to finance key projects such as the expansion of the Jomo Kenyatta International Airpot Airfield.
Early this year, President William Ruto announced that the government would embark on the expansion of the Nairobi-Nakuru-Mau Summit Highway, however, the only viable way for the government to proceed with the same is through private-sector financing.
However, it remains to be seen whether the local private sector will be able to raise the capacity for such huge infrastructural funding.
This initiative comes amid growing concerns over the government's heavy reliance on domestic borrowing, which has strained local banks, limiting their capacity to extend significant loans to the public.
However, the government insists that areas such as the Kenya Pensions industry and insurance sector have about Ksh2 trillion and Ksh1 trillion identified as vital sources of patient capital for infrastructure development.
Additionally, the government seeks to reduce loan dependency by collaborating with these sectors and leveraging innovative financing solutions like infrastructure bonds.
The Treasury revealed that the initiative aligns with Vision 2030 goal of transforming infrastructure through sustainable financing partnerships.
