It has been reported that county projects worth over Ksh. 24 billion have stalled due to financial and land disputes. Public Private Partnerships (PPPs), which are long-term contractual arrangements entered between the public (Government) and private players to deliver agreed goods and services can reverse this trend. The most important characteristic of PPPs is that there is adequate identification, quantification and considerable sharing of risks between the parties in the project design, financing, construction, operation and maintenance, which makes it possible to execute project of all types. The risks are shared in a way that the parties are assigned what they are able to absorb and hence, a strong incentive for the private players to put all measures to ensure the success of the project in order to recoup their investment. Under PPPs, the parties are thus incentivized to deliver agreed project deliverables as per specification and budget.
The rationale for greater use of PPPs is that globally, governments budgets have faced a myriad of challenges, while the demand for infrastructure, services and developments has been increasing due to emerging issues like climate change, global warming, disasters like the ongoing flooding and drought, devolution, urbanization, high population growth and increased poverty levels. Many countries and regions are embracing user charges/fees, provided that the services offered are up to acceptable standards. According to the World Bank, Kenya requires infrastructural investments of over US$ 40 billion per year for the next 10 years, of which only US$ 15 billion is available, hence a deficit of US$ 25 billion, which affects counties equitable share. PPPs can bridge this financing gap, because well-structured PPPs avail innovative finance, technology, managerial expertise, risk identification, costing and minimization, whole life cycle concept (projects being planned from start to completion and with attendant activities), efficiency and effectiveness in projects implementation. Under PPPs, projects achieve agreed specification, outputs, deliverables and functionality of finished product, which leads to savings and improvement of the life of a project, maximizes assets utilization in service delivery.
Kenya has the necessary legal, institutional and historical capacity for use of PPPs, including the PPP Act 2021, which allows counties to use PPPs because of five motivations: One, it is a strategy of increasing investments in infrastructure and other developments without overburdening the public sector. Secondly, it is an alternative for infrastructure financing, which brings efficiency, economy and effectiveness. Thirdly, it introduces fiscal and monetary discipline in projects; fourthly, it operationalizes effective use of public assets; and fifth is bundling of project activities for comprehensive financing and implementation. Dr Giti is an urban management, public – private partnerships (PPP) and environment specialist. mutegigiti@gmail.com , @danielgiti
Dr. Daniel Mutegi Giti 