The Budget statement for the FY 2020 -2021 has shown greater reliance on application of Public Private Partnerships (PPPs) to fund the development agenda going forward. It shown that the country intends to attract more than 200 billion in financing various projects. This reliance on PPPs is borne out of the fact that globally, the public pulse has been on a decline, while the demand for infrastructure and services has been increasing due to urbanization, high population growth and increased poverty levels.
Kenya requires infrastructural investments of over US$ 40 billion per year for the next 10 years, of which only 15 billion is available, leaving an annual deficit of US$ 25 billion. This deficit can only be addressed by ingenious financing mechanisms like PPPs. Well-structured PPPs avail innovative finance, technology, managerial expertise, risk identification, costing and minimization, whole life cycle concept and efficiency and effectiveness in projects implementation. It reduces the operation & maintenance costs because the developer factors in the O& M during the bidding, designing and financing of such projects.
PPP projects are keen to achieve agreed specification, outputs, deliverables and functionality of finished product, which leads to savings and improvement of the life of a project. It maximizes assets utilization in service delivery, and as such, Kenya has many private equity, insurance firms, cooperatives, high net worth individuals and other private players willing to invest in well-structured PPP projects, because of the realization that private and public sector should always collaborate because they are not in any kind of competition. The citizenry is also increasingly aware of the financing constraints faced by governments and are willing to pay some level of user charges pays provided the services offered are up to standards.
The reliance on PPPs is therefore a welcome move by the government and it should be actively pursued in the big four agenda items and achievement of Kenya Vision 2030. PPPs can be utilized in the development of the rural access roads to enable the farm produce to reach the markets on time, alongside industrialization from the farm produce. We can exploit our mining potential, our green energy potential, and urban housing through PPPs. Major slums sit on prime public land which is suitable for land swaps and Tradable Development Rights (TDR), which have been seen to be attractive to private entities.
Dr. Daniel Mutegi Giti 