Kenya facing eight-year Sh3.4 Trillion ($40 Billion) financing gap



This gap is created by the government’s need to spend Sh5.1 trillion ($60 billion) on infrastructure/XINHUA-File
NAIROBI, Kenya. The country faces an infrastructure financing gap of Sh3.4 trillion ($40 billion) over the next eight years, with energy, roads, railways and ICT commanding a significant chunk. This gap is created by the government’s need to spend Sh5.1 trillion ($60 billion) on infrastructure, against available funds of Sh2.1 trillion ($25 billion) to be used between now and 2020.
Allocations in the 2012/2013 fiscal year for infrastructure stand at Sh267 billion, which is less than nine percent of the country’s GDP rather than the ideal level of 15 percent of GDP.
“The government and the private sector can get involved in delivering the public services that have traditionally been a government responsibility,” said Stanley Kamau, the Director of Public Private Partnerships (PPP) in the Ministry of Finance.
Speaking during the Strathmore Business School Alumni Seminar on Public Private Competitiveness on Friday, Kamau said the opportunities for PPPs to develop the country are endless from housing for the public sector to private prisons.
Parliament is currently debating the PPP Bill that seeks to set in place a reform agenda for PPPs, establish a PPP Secretariat at the Treasury as well as PPP nodes in contracting authorities.
“The benefits for the private sector in the Bill are risk mitigation mechanisms through various guarantees, and a fund to be developed that will support projects that are economically viable but not financially viable without government support,” Kamau explained.
The World Bank has committed Sh3.4 billion ($40 million) in financial support to go to priority projects in the roads and energy sectors in Kenya.
A project like the commuter rail transport system from the Jomo Kenyatta International Airport (JKIA) to Nairobi’s Central Business District, will be done by the public sector (Kenya Railways) laying the tracks and the private sector handling operational maintenance.
Other PPPs currently in the works include JKIA expansion, second container terminal in Mombasa, the Mombasa Convention Center, the Olkaria geothermal project, Kisumu Port and housing for security forces.
Also addressing the seminar, Thomas Ross, Senior Associate Dean at the Sauder School of Business in Canada said the private sector brings efficiency and innovation to PPPs which government often lacks.
However, he added that though the PPP model is an attractive option for most developing countries keen on building infrastructure, it is not void of challenges.
“PPPs on large infrastructure projects tend to involve contracts with private parties that may extend for 40, 50 or 99 years. So you have to have a contract that protects public interest and one that contemplates changes,” Ross explained.
 
Plans to set up resort cities to
boost tourism bed capacity
other two resort cities will be set up at in northern Kenya, courtesy of the new Lamu Port, a new modern railway line and a highway stretching from Lamu to Ethiopia and S. Sudan
SPECIAL REPORT BY XINHUA CORRESPONDENTS Chrispinus Omar
 
NAIROBI (Xinhua) -- Kenya plans to construct three resort cities in order to deliver on its target of increasing bed capacity to cope with anticipated increase of the number of tourists in the country.
Tourism Minister Dan Mwazo said the resort cities will be constructed at the Coastal towns of Diani and Kilifi, and one in Isiolo in northern Kenya as part of the flagship projects under Vision 2030.
“Besides the resort cities, other two resort cities will be set up at in northern Kenya, courtesy of the new Lamu Port, a new modern railway line and a highway stretching from Lamu to Ethiopia and Southern Sudan,” Mwazo said on Wednesday during the launch of Marassi Golf Resort &SPA, under the flagship of Emaar Hospitality Group and the African Dream Collection.
Mwazo, who also attended Africa Hotels Investment conference which ended in Nairobi on Wednesday, said EMaar Group has thrived in Dubai, and its entry into the Kenyan market is set to benefit tremendously from the expertise, international standards and practices that they bring.
He added that the group has responded positively to the country’s call for more investment in tourism.
More than half a dozen leading international hotels have confirmed plans to set up their operations in Kenya, as one of the key outcomes in the conference.
To be operated under the flagship five star premium hotel brand of Emaar, The Address Hotels + Resorts, the new resort in Kenya marked the second hotel management contract for the company in Africa.
The Address Hotels + Resorts has already signed management contracts to operate The Address Marassi Golf Resort & Spa, an integral part of the Marassi master-planned community developed by Emaar Misr, the wholly owned subsidiary of Emaar Properties in Egypt.
The Kenyan resort near the Masai Mara is developed by The African Dream Collection Ltd. To be named Enkeresi Mara by The Address Masai Mara, the resort marks a distinctive new addition to the portfolio of The Address Hotels + Resort.
The minister assured investors in the hotel industry that the government was ready to offer incentives such as land on lease, tax holiday concessions aimed at increasing Foreign Direct Investment.
Hanif Poona of the African Dream Collection, said his organization understood the tourists’ needs, and was working to promote incentive/VIP holidays both in Kenya and Dubai, and pledged to operate the new resort to the highest standards in order to attract tourists from across the globe.
KTDC CEO Marianne Ndegwa welcomed potential foreign investors wishing to invest in Kenya’s hospitality sector.
Ndegwa said potential foreign investors can take full advantage of available opportunities through direct investment, joint ventures with Kenyan entrepreneurs or public/private sector partnerships.
“KTDC is actively playing its role to facilitate the development of an additional 3,000 beds within the medium term plan, 2008 - 2012, in order to meet the growing demand for the Kenyan Tourism product, and a further development of 65,000 beds by 2030,” she said.

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