NAIROBI, Kenya: Public Private Partnerships [PPPs] have enabled the United Kingdom to deliver numerous development projects that have industrialized the country, and Kenya can emulate UK’s success in delivery of PPP projects in the following ways:
Regulatory Framework: The government still has a long way to go in improving gaps in regulation. Despite the efforts in coming up with the Public-Private Partnership Bill 2021 which aims to address the matters regarding implementation of PPPs by the County governments, institutional framework and Unsolicited Proposals, the element of concessional agreements is still lacking. The government should provide a clear framework on issues relating to them such as risks, approval processes and mechanisms for servicing long term debt to avoid losing investor confidence,
Procurement Policy: The government should consider establishing a specific procurement framework just like UK’s that is open, restricted and competitive with negotiation and competitive dialogue done with prior publication, and once publicized there is need to come up with ways to visibly track approvals digitally, as well as information displayed to the general public, to ensure competent and capable contractors who have been thoroughly scrutinized are chosen to procure and manage PPPs efficiently,
Incentives for Private Sector Engagement: The government should strive to provide incentives to the private sector that will encourage uptake of projects, for example,
- Tax incentives including; exemption from registration tax on acquisition of real estate, reduction of exemption from various appropriation charges, and recognition of a certain percentage of investment as a reserve for servicing corporation tax and protection against reduction of tariffs,
- PPP laws harmonized to provide for acquisition of private land by the contracting authority on behalf of the investor
- Encouraging of Swiss challenge in the bidding process, where an unsolicited bid for a public project is published to invite third parties to match or better it thus fostering public-private sector trust, support and confidence in the PPP projects thus gain significant traction.
- Financing for Projects: The government should incorporate provisions for enabling other forms of financial support to make projects commercially viable for private investors for example joint ventures by private companies to finance PPP projects as is the case for UK. Additionally, they can offer operational and maintenance support grants to the private entities to show their commitment to the projects,
- Institutional framework: The government should institute bodies tasked with specific urgent responsibilities and directly answerable to the different arms of the government, for example a dispute resolution body that can listen to PPP cases to hasten dispute resolution as opposed to going directly through the court, and separate Project Policy Implementation and Project Development Agencies to ensure there in sufficiency in carrying out duties under their mandate for proper implementation of PPP projects, and
- Housing Related Recommendation: Given Housing as a Big Four Agenda item, we have the following recommendations
- The government should focus on enabling the private sector to build houses rather than government getting involved in the construction; since announcing the Big Four agenda about 4 years ago, the government has delivered less than 1000 houses so far thus falling short of the annual 500,000 target. Private sector players with the right incentive will accelerate delivery,
- There is no shortage of land, as there is a lot of private land looking for Joint Venture partners, hence the government should not look at land as an important ingredient but focus on financing and infrastructure incentives for private developers,
- Focus on financing incentives for developers and incentives for end users, primarily through tax incentives,
- Provide housing infrastructure incentives in areas such as roads, sewer, water and power, either through delivering them or some rebates for developers who put them up, and,
- Expedited statutory approvals for developments that registered as part of the Housing Agenda.
Public-Private Partnerships (PPPs) in the real estate industry in Kenya have not been promising owing to the numerous challenges in regulatory framework involving procurement, private sector engagement, financing and institutional framework. However, with the government’s effort to revitalizing the PPP Program, there is hope for sustainable development through them to fast track achievement of industrialization.
The real estate sector stands to benefit from developments through the PPPs Initiative, if the recommendations aforementioned are taken into consideration, for the government to facilitate timely and successful implementation and delivery of PPP projects thus improving the country’s economy through this model.