The amount of money that private investors invested in public-private partnership (PPP) projects in Kenya dropped by a staggering 90.5% in the financial year that ended in June 2024.
This drop is highlighted by official data, and it suggests that the Treasury will face more challenges this year after the Adani Group deals were cancelled.
According to new data, private investors invested Sh4.3 billion in PPP projects for the year ending in June 2024, a big decrease from Sh45.6 billion in the previous year, which ended in June 2023.
This major drop in investment may be because the economic situation in Kenya is not good for private investors anymore. Reasons for this can include unstable economic conditions, high public debt, or changes in government policies that make investing seem risky.
Many investors do not trust President William Ruto and his policies, hence withdrawing from the country to other countries.
There may also be challenges in getting approvals and managing PPP projects that discourage investors. The PPP process can be complicated, and delays in getting projects approved or in negotiations may tire investors out.
Changes in government or shifts in policies can create uncertainty. Investors prefer a stable and predictable political environment, which can be disrupted by-elections, new laws, or changes in government priorities.
Many people may distrust PPPs because of concerns about transparency and how benefits are shared. Negative public opinion, influenced by past projects that may not have served the public well, can lead to resistance against new PPP projects.
The performance of previous PPP projects can also affect what investors think. If past projects did not give good returns or faced major problems, it might make investors hesitant to invest in new ones.
Additionally, international investors may be holding back money because of global economic issues, such as rising interest rates or geopolitical tensions, leading them to prefer more stable investment opportunities.
The cancellation of significant PPP deals, like those with the Adani Group, could indicate bigger problems regarding investor trust or the feasibility of projects.
With the Kenyan government facing financial challenges, it might not be able to provide the financial support or guarantees that investors look for in PPP projects, making these opportunities less appealing.
🟫Treasury’s headache as PPP project funding slumps 91pc
— Construction Today Kenya🇰🇪 (@Constafrica) January 10, 2025
The value of private investments into public-private partnership (PPP) projects dipped by a massive 90.5 percent in the financial year ended June 2024, official data shows, signalling further trouble for the Treasury this… pic.twitter.com/xsUhsKfo4Q
Some sectors may face particular problems, especially in infrastructure, like difficulties in land acquisition, environmental approvals, or utility costs that do not attract private investment.
This big drop in investments shows that Kenya needs to tackle these issues by making policy changes, improving transparency, bettering project execution, and possibly changing how PPPs are structured to make them more attractive to investors.
The government may need to simplify processes, provide stronger guarantees, and focus on sectors where PPPs have worked well before or where there is a pressing need for development.
