The enactment of the Public Private Partnerships (PPP) Act of 2021 in Kenya marked a significant turning point in the country’s approach to infrastructure development and service delivery. Notably, the new legislation explicitly empowers county governments and their corporations to enter into PPP agreements, opening up a new frontier for potentially impactful projects at the local level. This decentralization of PPP capabilities recognizes the critical role of county governments in addressing the specific needs and priorities of their populations. By leveraging private sector expertise and financing, counties can potentially overcome budgetary constraints and accelerate the provision of essential services and infrastructure.
This article aims to explore the current state of PPPs at the county level in Kenya, the expected challenges in their implementation, the significant opportunities they present, and potential solutions to address the forementioned hurdles.
The State of PPPs at County Level
Despite the enabling legislation, the actual implementation of PPP projects at the county level is still in its nascent stages. Available literature suggests that while there is growing interest and recognition of the potential of PPPs by county governments, the model is yet to materialize widely. Some counties have been exploring the potential use of PPPs, particularly in sectors like water and sanitation, waste management, and affordable housing.
The Quarterly Projects Progress and Status Report published in March 2025 by the Directorate of PPP indicate that only 2 of the 35 projects in the national PPP project pipeline are the County level. The said projects are still at their early development stages, indicating that the Act still has a long way to go in gaining traction at the county level.
Challenges Facing County PPPs
The implementation of County PPP projects faces various challenges including:
- Lack of specific regulatory framework: The absence of detailed regulations tailored to county governments is a major impediment. Since the county PPPs are relatively small, the current regulatory framework might not be very efficient in providing guidance on the selection, screening, structuring and tendering of the county PPPs.
- Capacity deficiencies: Being a new model, county governments face capacity challenges in PPP project development, appraisal, procurement, contract negotiation, management, and implementation. As such they are forced to procure transaction advisory services that are always beyond their reach.
- Financial sustainability and creditworthiness: Private sector partners are concerned about the financial health and stability of county governments and in turn opt out of such projects.
- Political and governance risks: Changes in political leadership, policy inconsistencies, and potential for corruption can undermine investor confidence and disrupt PPP projects.
- Public resistance: County PPP projects have direct impact to the local community. Being a new model, if the public is not very well informed, they will resist private sector involvement in the projects since they perceive it as a “take-over” of “their” asset.
- Size of county PPPs: Considering that county governments have not implemented PPP projects before; it is highly likely that only smaller projects might reach financial closure in the initial phase. Unfortunately, not many investors might express interest in such projects.
The Opportunities at County Level
The challenges notwithstanding, if properly structured and used for the right projects, county PPPs present immense opportunities and hold the potential for transformative impact at the grassroots level.
- Building a strong case for local financing for PPPs: County PPP projects present a good opportunity for Kenya to unlock local financing solutions. Local sources of financing like Savings and Credit Organisations (SACCOs), community bonds, local banks etc could be tapped to finance county PPP projects.
- Building capacity and track record: County projects can provide a very good opportunity for county governments and Kenya to build capacity and track record in the management of PPPs. The lessons learnt and the track record established will be critical in attracting quality investors for future larger scale PPP projects.
- Addressing local infrastructure deficits: Counties are directly responsible for providing numerous essential services and infrastructure, including county roads, water and sanitation, waste management, street lighting, and healthcare facilities. PPPs can provide the much-needed financing and expertise to develop and improve these critical areas, leading to better living standards and economic opportunities for local residents.
- Boosting local economic development: PPPs if used for the right projects can create jobs, stimulate local businesses, and attract further investment, contributing to overall economic growth within the county.
- Improving service delivery efficiency and quality: Private sector involvement often brings a focus on efficiency, performance-based contracts, and quality standards, leading to better outcomes for citizens.
- Reducing the burden on county budgets: Counties in Kenya, especially those with low “own-source revenues” often face challenges in the timely financing their critical services. By leveraging private sector financing, counties can alleviate the immediate pressure on their limited budgets, freeing up public funds for other essential services.
- Fostering local ownership and sustainability: Well-structured PPPs aligned to the context and needs of the county can command public ownership and support, increasing their chances of success.
Solutions to Address the Challenges
To effectively mitigate the expected challenges and harness the opportunities presented by county-level PPPs, a multi-pronged approach involving both national and county-level interventions is necessary. Below are possible solutions:
- Expedited development of county-specific PPP regulations: The National Treasury, in collaboration with the Council of Governors and relevant stakeholders, should prioritize the formulation and issuance of clear and comprehensive regulations tailored to the specific context of county governments. These regulations should address project identification, feasibility studies, procurement processes, contract standardization, risk allocation frameworks, and monitoring mechanisms suitable for county-level projects.
- Additional support by national entities: The National government should offer more support to counties. The National Treasury and other ministries/national contracting authorities can handhold counties as they implement their projects. For example, the Kenya National Highways and the Kenya Urban Roads Authorities that have built experience in the implementation of road PPPs can support counties in the implementation of their pioneer road PPPs.
- Capacity building and technical assistance: The national PPP Directorate should play a central role in providing action-based capacity building programs and technical assistance to county governments. This could include training workshops, development of standardized guidelines and templates, and the provision of expert advisory services throughout the project lifecycle. Partnerships with experienced PPP consultants and institutions such as Miundo Misingi can also be explored.
- Work with Project Preparation Facilities (PPFs): County governments should also seek financial and technical assistance from PPFs necessary to undertake feasibility studies and tendering of PPP projects. An example is the County Government of Taita Taveta that is working with the African Legal Support Facility (ALSF) to prepare its first water PPP project.
- Strengthening financial management and creditworthiness: County governments need to strengthen their financial management systems, improve revenue collection, and enhance fiscal transparency to build investor confidence.
- Promoting good governance and transparency: Establishing robust governance frameworks, ensuring transparency in procurement and contract management, and actively engaging with civil society can help mitigate political and governance risks and foster public trust in county PPPs.
- Developing standardized PPP frameworks and contracts: The development of standardized PPP frameworks and contract templates specifically for common county-level projects (e.g., water treatment plants, waste management facilities) can reduce transaction costs and accelerate project implementation. These templates should be flexible enough to be adapted to specific county contexts.
- Prioritizing public awareness and stakeholder engagement: County governments should proactively engage with local communities and stakeholders throughout the PPP project lifecycle, ensuring that their concerns are addressed and that the benefits of the projects are clearly communicated.
- Incorporation of Investment Companies/Special Purpose Vehicles: The establishment of private sector oriented independent investment entities can effectively address many of the identified challenges. As at December 2024, 14 out of the 47 counties had established their Investment and Development Corporations, body corporates incorporated by an Act of the County Assemblies. The mandate of the corporations is to identify, screen, manage and implement investments on behalf of counties. If properly structured, these entities could be more effective in attracting private sector investment.
Conclusion
County governments represent the next significant frontier for impactful PPP projects in Kenya. The legal framework provided by the PPP Act 2021 has laid the groundwork for this potential to be realized. However, the absence of specific operational regulations and the presence of capacity and financial challenges necessitate a concerted effort from both national and county levels. By prioritizing the development of tailored regulations, investing in capacity building, promoting good governance, and fostering effective stakeholder engagement, Kenya can unlock the immense opportunities that county-level PPPs offer. The journey may have just begun, but with strategic planning and collaborative action, PPPs at the county level can indeed become a powerful tool for transformative change.
For organizations and investors seeking to navigate the evolving landscape of county-level PPPs in Kenya, as well as county governments looking to explore PPP opportunities, the Miundo Misingi Hub offers specialized technical support. Our experienced team can help identify and develop viable projects, prepare robust concepts and business cases, and structure partnerships as well as financing that align with local development priorities. Reach out to us at info@miundomisingi.co.ke to discuss how we can support your journey toward successful, sustainable infrastructure development partnerships.
