MODEL

World Bank roots for PPPs in infrastructure projects

World Bank says the model is more beneficial when incorporated in projects based in developing countries.

In Summary
  • Kenya’s PPPs have 45 projects under implementation or in active operation.
  • Six of them are road projects totalling 639km under the roads annuity and tolling programmes.
Nairobi Expressway. Image: Charleen Malwa.
Nairobi Expressway. Image: Charleen Malwa.

The World Bank is advising that regional integration through public-private partnerships is the best solution to boost economies recovering from shocks arising from the Covid-19 era.

It says the model is more beneficial when incorporated in infrastructure projects based in developing countries currently grappling with tough economic times triggered by high inflation and further tightening of fiscal and monetary policies.

“This would promote connectivity and trade while allowing investments and ideas to travel across economies, therefore making a prerequisite for regional economic integration,” the lender says in a report released last week.

It reiterates that a successful post-pandemic recovery plan must comprise high-quality connectivity infrastructure that has a clear sense of direction.

“It is not only about returning to the pre-pandemic levels, but taking advantage of the opportunity to build stronger and climate-smart regional integration, creating resilient economic ties and the PPP model is an effective tool for that.”

The Permanent Secretary for Ministry of Transport, Infrastructure, Housing and Urban Development, Mwangi Maringa says developmental projects implemented in Kenya so far under the PPP model have boosted the country’s economic growth.

Among them, he cites the Moja Expressway project which has so far recorded a 10 million trip milestone since its official launch in July last year, making approximately Sh2.1 billion.

“Besides this, the government is on the process of fast tracking other projects under the same model to leverage on quality and funding, as the country seeks to attract more investors and at the same time boost its investment attractiveness index in the global space,” Maringa said during on February 7 celebrations marking the Expressway milestones.

Currently, Kenya’s PPPs have 45 projects under implementation or in active operation, six of which are road projects totalling 639km under the roads annuity and tolling programmes.

Another 39 are electricity generation projects totalling 3,034 megawatts of installed capacity.

Originally, road tolls were introduced in Kenya in the late 1980s but were scrapped mid-1990s in favour of the Roads Maintenance Levy to eliminate corruption at toll stations.

The levy is currently charging motorists Sh18 per litre from the purchase of petrol and diesel respectively.

Even so, World Bank notes that commitments in public-private investment model in the African region have been minimal in the past years.

According to Private Participation in Infrastructure Projects Database, very few cross-border regional infrastructure projects have been sponsored by the private sector since 2010.

This represents a total value of less than one per cent of all public private investments in low- and middle-income countries in the last decade.

Nonetheless, the lender notes that as much as implementation of the multi-country PPP projects could be a daunting task, leveraging on them could be a powerful mechanism for developing cross-border infrastructure, especially climate-smart infrastructure.

“If they demonstrate a strong business case and generate sufficient cash flows to pay back the initial investments, regional infrastructure projects using PPPs can progress faster than traditional procurement,” World Bank says.

 

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