THE World Bank has approved a Sh3.4 billion ($40 million) loan to Kenya to support public-private sector partnerships.
The amount was announced yesterday for the Infrastructure Finance Public-Private Partnership Project aimed to support Kenya to improve its enabling environment and generate bankable public-private partnership projects in transport and energy sectors.
It will also deal with other areas that are critical to the transformation of the country from low to middle income status, the World Bank said in a statement.
The project will focus on financing the transaction preparation, institutional support and regulatory reforms necessary to develop a bankable project pipeline that the government can take to market for private sector financing.
The new initiative, through the recently approved Public-Private Partnership Policy, will increase private participation in Kenya's infrastructure market across sectors to support national economic growth and employment creation, the statement added.
"Kenya faces a significant infrastructure financing deficit estimated at Sh178.5 billion ($2.1 billion) annually, and this imposes a serious constraint to growth and doing business in Kenya," said Johannes Zutt, World Bank country director for Kenya is the statement. "Our analysis shows that Kenya's per capita growth rate can be increased by three percentage points if infrastructure financing is increased to the average of a middle income country."
While the country spends about Sh136 billion ($1.6 billion) a year on infrastructure, the World Bank projects that the it requires a sustained expenditure of Sh340 billion ($4 billion) a year, or about 20 per cent of its GDP, over the next decade.
"The challenge is to strengthen government capacity to prepare and procure viable projects, provide the legal, regulatory and fiscal environment that gives private investment the confidence to take longer term debt and equity exposure in infrastructure investment," the bank notes.