………..Public Private Partnership as a Success Factor in Third World’s Socio-Economic Development: The case of Kenya ………………..

It is the mandate of every modern government to create an enabling environment for its citizenry to live in and conduct business. This includes the provision of public infrastructure such as electricity, roads, rail, sea, and airports, as well as services such as water, education, health, and sanitation. These public goods are a prerequisite for economic growth and development, as they lower the cost of doing business, and facilitate easier access to markets.
As a way to increase the competitiveness of their countries’ products in the global market, most governments allocate huge budgets to finance infrastructure projects. This is not withstanding the huge budgetary constraints that most third world governments have to contend with because of such heavy expenditure on infrastructural development.
A major threat to the realisation of the benefits of such huge national expenditures, however, is corruption. This often leads to loss of cash, as well as stalling or construction of sub-standard projects with high maintenance costs, thus raising the cost of doing business. What’s more, future generations come to inherit external debt burdens for funds borrowed to finance projects that never yielded any tangible benefits. This ends up eroding the countries’ global competitiveness as investment destinations, besides compromising the quality of life for both the current and future generations, thus defeating the very purpose for which the projects were initiated.
According to Control Risks, a global consulting firm on national growth and development, many African governments have so far failed to tackle key structural issues that are often exploited for corruption. Rather, the governments find it easier to borrow more from local and international financial markets to finance local development, instead of sealing the loopholes through which locally generated funds leak out. In majority of cases, cash lost through corruption would be sufficient to finance a good proportion of most national projects.
The report further says that, as at the beginning of 2015, economic growth in sub-Saharan Africa had outpaced political reforms and governments had so far failed to tackle key structural issues. “Large inward investment in East African energy and the prospect of a resource boom is putting pressure on political arrangements.”

The Kenyan Debt Situation
Kenya, for instance, has committed to borrowing billion of Shillings to finance mega infrastructure projects, including building the standard gauge railway line between the port of Mombasa and Nairobi, power generation and road construction. The country’s external debt stands at Kshs.2.3 trillion, 54 per cent (Kshs.1.26 trillion) of which is foreign. Last year, the National Treasury got parliamentary approval to raise the maximum amount it can borrow from Kshs.1.2 trillion to shs.2.5 trillion, citing the need for more capital to fund flagship projects.
The World Bank has warned that external debts and reduced inflows of foreign investments are set to hit developing nations hard. Fiscal constraints experienced by these countries, however, have resulted in the development of new and innovative approaches to the provision and financing of public infrastructure and services, gradually supplementing the traditional role of governments as the primary provider of such infrastructure and services. One of the strategies that has been devised and adopted is the cooperation framework between governments and private sector, also known as the Public Private Partnerships (PPPs). In this partnership framework the governments are roping in the private sector to help finance and develop certain projects.

Journey towards PPPs in Kenya
The Kenya Government adopted the PPP framework, reflecting the Government’s desire to improve the quality, quantity, cost effectiveness, and timely provision of public infrastructure and services.
It has been argued that the private provision of public infrastructure and services has the potential to offer enhanced value for money and enables the government to use the private sector’s delivery project expertise and capability for the benefit of the people.
Over the years, Kenyans have expressed frustrations at the perceived inefficiency of government departments and public bodies in the delivery of services. These concerns are especially prevalent in cases where such public bodies enjoy monopoly. It has been suggested that given a chance private bodies could deliver more efficient services, sometimes at a cheaper cost.
In this context, the Government of Kenya has made infrastructure development through public private partnerships a priority as a mechanism that can help address the major infrastructure gaps in the country. The Government has over the years committed to improving and strengthening the environment for private sector participation in national development.
According to Kenya vision 2030, the country’s economic development blueprint, major infrastructure projects such as the development of the second transport corridor (LAPSSET), power projects, light rails, and mass transit systems in the urban centres will be developed.
The blueprint further points out that these projects require massive capital investments and will not be implemented through sole reliance on public resources. The government thus enacted a Public private partnerships Act (2013) to mobilize funds for infrastructure and other development projects under public private partnership arrangements. The Act also provides for the county governments to approve and undertake PPP projects, provided they do not pose contingent liabilities to the national or, county governments.

The Balancing Act
For programmes likely to generate liabilities, counties must seek clearance from the national government. The government will therefore prioritize the operationalization of the public private partnership Act (2013) to facilitate investment in infrastructure and in other development projects, which are necessary for the country to achieve the targeted double-digit economic growth rates under this medium term plan, notes the report.
According to the Public Private Partnership Unit, the agency that collaborates public private partnerships (PPPs), since 1996, Kenya has attracted private investment into the country’s economic infrastructure sectors including telecommunication, energy, transport, water, and sewerage. These investments have demonstrated both the commitment of government of Kenya to PPPs and the interest by private investors, lenders, and operators in these sectors.
However, Public private partnership unit notes that these infrastructure investments occurred without a specific policy, legal and regulatory framework for the partnerships. Therefore, the Government of Kenya’s first step was to strengthen the legal and regulatory framework for carrying out public private partnerships as part of a wider agenda of increasing private sector investments in infrastructure development. This resulted in the formation of the Public Private Partnership Unit (P.P.P.U), which was established under section 8 of the public private partnership (PPP) Act, 2013, as a special purpose unit within the National Treasury of the Government of Kenya.
The PPP Unit’s mandate and focus is to serve as the secretariat and technical arm of the P.P.P committee, which is mandated with assessing and approving PPP projects in Kenya. The PPP unit was therefore established as a specialized unit within the National Treasury to promote and oversee the implementation of the PPP programmes.
The Secretariat further serves as the resource centre for best practise and guardian of the integrity of the public private process, plays a large role in identifying problems, making recommendations to the PPP committee regarding potential solutions and ensuring that projects meet such quality criteria as affordability, value for money and appropriate transfer of risk.
The Government of Kenya has expressed confidence that through PPPs, the private sector can offer a dynamic and efficient way to deliver and manage public infrastructure. These efforts are geared towards achieving vision 2030, Kenya’s long term development strategy, so that future generations can gain from the benefits of modern services, improved living standards and reduced poverty.
However, according to Centre for Legal Research and Policy Development, there are key challenges in the way towards the realization of PPP projects. Key among them is developing and establishing strong legal and regulatory framework that can clarify the legal authority to grant concessions. In addition, lack of clarity in the procurement process has been cited.
The Centre further clarifies that the lack of guarantee in political commitment to give confidence to the partners to make investments will erode the gains of PPPs. In addition, to be noted is the complexity of PPP arrangements and the high cost involved.
However, these should not act a barriers to the successful implementation of PPPs. Rather, finding solutions to these among other challenges should be seen as important steps towards the full realization of the benefits of tapping into the technical expertise and resources from the private sector to facilitate the growth of national infrastructure and service delivery not only in Kenya, but also across the developing world.

References:
1. Kenya Constitution, 2010
2. Public Private Partnerships Act No.15 Of 2013
3. Centre for Legal Research and Policy Development
4. Public Private Partnership Unit Kenya
5. Control Risks
6. Kenya Vision 2030: Second Medium Term Plan (2013-2017).Transforming Kenya


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