Arusha — The World Bank has approved a total of $40m to support Kenya's public-private partnership project an official of the bank has said.
"Kenya's public private partnership project (PPP) is being supported by $40m infrastructure finance that was approved by the bank recently in Washington DC, said the bank's country director for Kenya Johannes Zutt.
He said the project will support Kenya to improve its enabling environment and generate bankable public-private partnership projects in transport, energy and other sectors that are critical to the transformation of the country from low to middle income status.
"Accelerating infrastructure development supports the government's Vision 2030 and the Bank's Country Partnership Strategy for Kenya of enhancing Kenya's regional competitiveness and creating jobs," he said in a statement released to the media recently.
He explained the new initiative, through the recently approved Public-Private Partnership (PPP) Policy, will increase private participation in Kenya's infrastructure market across sectors to support national economic growth and employment creation.
"Kenya faces a significant infrastructure financing deficit estimated at $2.1b annually, and this imposes a serious constraint to growth and doing business in Kenya.
"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," he added
Kenya spends about $1.6b a year on infrastructure but requires a sustained expenditure of $4b a year, or about 20 percent of its Gross Domestic Product (GDP), over the next decade, according to the Africa Infrastructure Country Diagnostic Report 2010 produced by the World Bank in collaboration with the African Development Bank.
World Bank task team leader of the project Mr. Yira Mascaro said Kenya has a large and diversified capital market with promising prospects of becoming a sustainable source of financing for infrastructure project.
"But it requires structural changes and an enabling legislation to develop a long term debt market for financing infrastructure and other PPP projects," he noted.
Mascaro added that 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.