A great move on public-private partnerships

The appointment of private sector investment expert Christopher Kirigua as Director-General of the Department of Public Private Partnerships is laudable.

It shows the highest level of commitment by the government to tapping into public-private partnerships (PPPs)

The PPP Unit can concentrate on its advisory role to the contracting authorities as the newly created department focuses on resource mobilisation.

According to the African Development Report of 2014, Kenya requires $65 billion (Sh6.5 trillion) for infrastructural financing to meet its Kenya Vision 2030. For example, the energy sector requires $20 billion, housing and related housing infrastructure $10 billion and roads $9 billion.

Government financing for such investments through normal budgetary cycles stood at $25 billion. That is compounded by low investment by the private sector in the absence of proactive measures by the State.

PPP is the must-go-to thing for Kenya. With our current debt levels, it creates room for the application of new technology, innovation, capital, effectiveness and efficiency.

This is besides whole life cycle concept of projects — where a developer must factor in the design, finance, construction, operation and maintenance from beginning to end, which is a strong incentive for development of a superior product while avoiding unnecessary costs.

PPPs will reduce our infrastructure financing gaps and tame sovereign borrowings and debts, in addition to the creation of local long-term funding market. That will lead to the expansion of the economy and stimulation of job creation, increasing the quality of public services.

PPP is not a new concept. In 381 BC, the Greek city-state of Eretria hired a foreign contractor, Chairephanes, to drain Lake Ptechai. The deal had contract financing, risk management and incentives like exclusive use of land, retention of products and tax exemptions — akin to modern concessions.

[email protected]. @danielgiti