The government has started the process of finding alternative development partners following the cancellation of its proposed Public-Private Partnership (PPP) with the Adani Group.
This move comes as the government faces challenges in securing funding for its development projects.
In response to these challenges, the government is now looking to partner with local companies through PPP arrangements to help fund important infrastructure initiatives.
On Wednesday, the Treasury announced the formation of a private sector-led expert committee tasked with exploring ways to raise long-term capital from Kenya’s local financial markets for financing PPP projects.
The meeting, which took place at the Treasury buildings in Nairobi, was led by the Principal Secretary for Treasury, Chris Kiptoo.
According to a statement from the Treasury, the new committee will include key industry figures from the private sector.
These professionals will work closely with the government to raise the necessary capital to fund development projects across the country.
The committee will consist of experts from various fields such as finance, investment, infrastructure, and capital markets.
The Treasury also highlighted that the committee will be led by Dr. Hosea Kili, the President of APTAK, and Mr. Tom Mulwa, the CEO of Liaison Group, who will serve as the Vice-Chair.
The committee members are expected to leverage their expertise to enhance investment opportunities in crucial projects.
The committee has been given a three-month mandate to review the existing regulations and deal structures in the local financial markets.
Its goal is to identify ways to improve the investment climate for key infrastructure projects and to help the government better assess the viability of PPPs in Kenya.
In addition to this, the government is facing significant fiscal challenges that threaten its ability to finance major projects.
For instance, the expansion of the Jomo Kenyatta International Airport Airfield, which is a priority, requires substantial funding, and the only feasible option for moving forward is private sector financing.
Earlier this year, President William Ruto announced plans to expand the Nairobi-Nakuru-Mau Summit Highway, but again, the government is looking to private-sector investments to make this project a reality.
However, questions remain about whether the local private sector has the capacity to raise the large sums required for such massive infrastructure developments.
This initiative comes at a time when there are growing concerns about the government’s heavy reliance on domestic borrowing, which has put pressure on local banks. This has, in turn, limited their ability to extend large loans to the public.
Nevertheless, the government remains optimistic, pointing to potential sources of capital in sectors like the Kenya Pensions industry, which holds approximately Ksh2 trillion, and the insurance industry, which holds Ksh1 trillion. These sectors are seen as key sources of long-term capital for infrastructure projects.
To reduce the country’s dependence on loans, the government plans to work with these sectors, utilizing innovative financing solutions, including infrastructure bonds, to fund development projects.
The Treasury has emphasized that this initiative is aligned with Kenya’s Vision 2030 goal of transforming the country’s infrastructure through sustainable financing partnerships.
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