The Treasury is in the process of contracting out professional services to review the suitability of the processes used to identify Public Private Partnerships (PPP) deals in the country. Experts believe that the processes and systems used for the PPP projects in Kenya have inherent challenges which requires the review and necessary strategies to make PPPs attractive and effective as they should be. The slow uptake of PPPs, where for example it has been reported that the value of private investments in PPPs in Kenya dipped by 90.5 percent in the financial year ending June 2024. Private investors injected only Ksh. 4.3 billion into PPP projects, down from the Ksh. 45.3 billion injected in the financial year ending June 2023. In 2022, PPP projects drew Ksh. 80.6 billion with some of the funding going to the 27.1 km Nairobi expressway project. In the current financial year, the National Treasury had projected to draw Ksh. 50 billion into PPP projects. There is need to develop strategies to make PPP projects succeed in Kenya, because public financing of projects faces many challenges, despite the demand for more goods and services from the public sector. Successful PPPs must protect and ensure that Kenyans get Value for Money (VfM) throughout project preparation, implementation and life of contract. Process management from appraisal, preparation, award to completion, step by step and progressive process or the “gateway” process is key because lack of VfM means PPP project failure.
PPP project failures are because of defects in the identification, assessment and preparation (appraisal) of project, poor structuring, poor management of tender process (inadequate transaction management capacity), and poor contract management. In addition, the existence of high risks and limited incentives for private players can lead to PPP failure. The Asian Development Bank analyzed 6,273 PPP projects globally between 1991 to 2015 and found out that 259 were cancelled (worth $ 76.4 billion and 4.4% of committed $1.7 trillion PPP project), 67 were in distress and only 216 were completed. More than half of the cancelled projects were in Asia (54.5%), Latin America (40.8%) and Africa (2.9%). PPP project failure can broadly fall into 3 groups – Economic, Politics and Execution aspects. Economic failure arises from skewed responsibilities, improper risk identification, quantification, assignment and incentivization for parties to perform the assigned tasks, inadequate public sector capacity and poorly drafted contracts. The public sector should prioritize PPP projects based on the needs and sound economic principles and not based on purely political reasons. PPP projects should yield positive net social returns. Politics as a cause of PPP project failure is evidenced by failure to understand the political and operating environment, electoral cycles and the legal and regulatory environments, including the official and non-official policy on the same. The third cause of PPP project failure is execution touching on how PPP projects are executed. Dr Giti is an urban management, public – private partnerships (PPP) and environment specialist. mutegigiti@gmail.com , @danielgiti
Dr. Daniel Mutegi Giti 