Public-private partnerships (PPPs) have been used as a driver for economic growth and infrastructure development all over the world for many years. In recent times, however, PPPs have become popularized, especially with such a deal in motion involving our national airport. Anything that gains sudden popularity while marred with political influence often breeds confusion because of opposing views. This is why we thought it wise to shed light on the matter so you can discuss PPPs from an informed point of view.
Public-Private Partnerships (PPPs) are a broad topic that cannot be exhausted in a single article. However, I will try to explore facets of PPPs in Kenya and their impact. We will explore:
- Legal and Regulatory Framework for PPPs in Kenya
- Sectors Where PPPs Are Commonly Used
- Challenges to Successful Implementation of PPPs
- Notable Examples of PPPs in Kenya
- Role of Stakeholders in PPPs
- Benefits and Risks of PPPs
What is a public-private partnership?
A PPP is a long-term contractual agreement between a public entity (such as the government) and a private sector partner to finance, build, operate, and maintain projects that serve the public interest. By combining the resources and expertise of both sectors, PPPs allow the government to deliver large-scale projects more efficiently and cost-effectively.
Kenya also aligns with international best practices, including the UNCITRAL Legislative Guide on privately financed infrastructure projects.
PPPs in Kenya are primarily used in infrastructure, focusing on roads, energy, transportation, and healthcare. Major highways, energy projects like independent power producers (IPPs), and modern healthcare facilities have been delivered through PPP arrangements. Notable projects include the Nairobi Expressway and the Lake Turkana Wind Power, which we shall discuss in detail below.
Challenges faced by PPPs
Despite their immense potential for developing a country, Public-private partnerships (PPPs) are not free of challenges. One of the most significant challenges we have witnessed in recent times is public opposition. Especially in sectors like healthcare and water services, public opposition may slow down or derail a project. This mostly happens when the community is not well educated on the dynamics of a project or when there are concerns that a service may no longer be affordable with privatization.
Another challenge is corruption and lack of transparency in the bidding process, making it difficult for investors to trust the system. Political changes also pose a risk, as incoming administrations may alter or cancel previously approved projects. For instance, the Kenya-Uganda Railway PPP encountered political and financial challenges, which ultimately led to its restructuring. Despite these challenges, Public-Private Partnerships remain one of the most viable ways to further the development agenda of any country in the world.
Successful PPPs in Kenya
Kenya has seen several successful PPP projects that have significantly improved infrastructure and service delivery. Two prominent examples are the Nairobi Expressway and the Lake Turkana Wind Power Project.
(a) Nairobi Expressway
The Nairobi Expressway is a 27-kilometer road connecting Jomo Kenyatta International Airport (JKIA) to Nairobi’s central business district. It was developed through a PPP between the Kenyan government and the China Road and Bridge Corporation (CRBC). The project has reduced traffic congestion in Nairobi, significantly reducing commuters’ travel time.
(b) Lake Turkana Wind Power Project
This project is the largest wind farm in Africa and was developed through a PPP between the government of Kenya and private sector investors. The wind farm provides approximately 15% of Kenya’s electricity needs and is vital to Kenya’s push towards renewable energy.
Stakeholder Involvement in PPPs
The success of PPPs depends on the working relations of the key stakeholders of a project. The key stakeholders in a Public-Partnership Agreement include government ministries involved, private sector partners, financial institutions, and civil society organizations. Each stakeholder plays a crucial role in ensuring the project meets public needs while remaining financially viable for every investor.
When well executed, PPPs offer numerous benefits, such as improved infrastructure, enhanced service delivery, and increased efficiency through private sector participation. However, they also carry risks, including financial instability, poor project execution, and the potential for public backlash if the projects are not transparent or well-managed. This is why the government should ensure that PPP contracts have clear risk-sharing mechanisms and that projects are financially sustainable without overburdening the public.
Public-Private Partnerships (PPPs) are critical to Kenya’s infrastructure development and economic growth. Despite the challenges, PPPs offer a viable solution for closing the infrastructure financing gap. By improving the legal and regulatory framework, fostering better stakeholder collaboration, and addressing public concerns, Kenya can unlock the full potential of PPPs and ensure that these partnerships contribute to sustainable development.
