Private investors to benefit from capital subsidy fund

The government will set up a fund to offer capital subsidies to private investors undertaking state projects.

Public private partnerships (PPP) unit director Stanley Kamau Monday said the scheme, which is expected to be operational in six months, will be financed by the government and multilateral lenders such as the World Bank.

“The fund will support projects that are economically sound but not financially viable. It will act as a subsidy to move such projects to the bankability stage,” said Mr Kamau.

He spoke in Nairobi during a workshop organised by the PPP for the financial sector.

The unit will oversee the implementation of 47 major projects in energy, education, transport, solid waste management, water and irrigation.

The unit was set up after the PPP Act came into effect in February last year and is meant to provide technical support to government agencies under which the projects fall to ensure their success.

Investment Secretary Esther Koimett said the government would tap into the private sector finance and expertise to fill the gap in development spending.

“PPP model has been successfully adopted in many countries in enhancing government’s development budgets, opening many investment opportunities to the private sector and ultimately enabling upgraded infrastructure that affords better service to citizens in a country,” she said.

The country’s infrastructure requirements are set to increase following the recent discoveries of minerals. The findings have positioned the country as a potential oil and gas producer, creating the need for sufficient transport networks to serve the growing industry.

Data from the National Treasury shows that there is an estimated infrastructure funding gap of between $2-3 billion every year that is needed to address requirements in the country for the next 10 years.