As public financing becomes increasingly constrained, Kenya faces a defining development challenge: meeting rising infrastructure demands amid shrinking fiscal space.
This calls for a new approach to infrastructure delivery. Well-structured Public Private Partnerships (PPPs) offer a compelling pathway to mobilise capital, accelerate project delivery, harness private-sector expertise and safeguard fiscal sustainability.
The timely expansion and modernisation of critical infrastructure are central to sustaining economic growth and improving living standards in Kenya. Roads, railways, power lines, water systems and housing are urgently needed to sustain growth and improve livelihoods.
According to World Bank analysis, meeting Kenya’s infrastructure needs would require a sustained annual investment of about $4 billion (Sh516 billion), roughly 20 per cent of GDP, over the next decade. With the increasingly constrained public resources, the question Kenya must now confront is not whether infrastructure is needed, but how it can be delivered sustainably. PPPs stand out as a credible solution.
A public private partnership is a long-term arrangement in which government partners with the private sector to develop, finance and manage public infrastructure, while retaining regulatory control.
A project implemented under a public private partnership framework must meet the PPP suitability criteria, be of public interest, be affordable and more so, provide value for money; resulting in infrastructure delivered promptly, efficiently and affordably, and with strong value for money.
Kenya is guided by the PPP Act, 2021, which provides that public private partnership projects are generally evaluated against four key aspects.
These are public interest criteria, which confirm alignment with government policy objectives and delivery of social and economic benefits; project feasibility criteria, which assess technical, legal and operational viability; PPP suitability criteria, which determine whether the partnership model offers advantages over traditional procurement; and affordability criteria, which ensure that project costs remain sustainable within budget limits of the public (users) over the life of the contract.
Kenya’s experience with PPPs already demonstrates this potential. The Nairobi Expressway, delivered under a Build-Operate-Transfer model, mobilised private capital at scale and transferred construction and operational risk to the private sector, resulting in a major transport artery delivered faster than would likely have been possible through traditional public financing and without requiring the government to bear the full cost upfront.
Similarly, the Rironi-Mau Summit road project, structured as a PPP, is expected to leverage private investment to upgrade a critical regional corridor, improve safety and efficiency, and ease congestion along one of the country’s busiest transport routes.
These projects illustrate how well-structured PPPs can accelerate delivery of strategic infrastructure while preserving already limited public resources for essential social programmes such as healthcare and education.
Looking ahead, the energy sector presents the most significant opportunity for PPPs in Kenya, with electricity transmission standing out as a critical priority.
A 2025 report by the Ministry of Energy under the Kenya National Energy Compact notes that electricity access and supply reliability remain uneven, with approximately 69 per cent of rural Kenyans still unconnected.The challenge today is therefore no longer solely about generating power, but rather about reliably evacuating it to load centres and effectively delivering it to households, industries and other consumers.
Notwithstanding these challenges, notable improvements have been recorded across Kenya’s interconnected electricity network. Transmission availability is now at 99.9 per cent, reflecting enhanced grid stability and improved operational performance.
Additionally, system reliability indicators have also improved, with the System Average Interruption Duration Index (SAIDI) declining from 120.6 hours to 113 hours, and the System Average Interruption Frequency Index (SAIFI) reducing from 47.0 to 44.07.As such, total system losses have reduced to 21.21 per cent, recorded as at end of June 2025, down from the 23.16 per centrecorded in the previous period
The scale of investment required for the implementation of electricity transmission projects is daunting. Kenya’s Transmission Master Plan calls for more than 7,700 kilometres of new transmission lines over the next 20 years, at an estimated cost of approximately Sh576 billion. With competing socioeconomic priorities and restricted borrowing capacity, it is unrealistic to expect the exchequer to finance this expansion alone. Public finance is simply not enough.
In a landmark development, the Kenya Electricity Transmission Company (KETRACO) recently signed a PPP project agreement with a Consortium of Africa50 and Power Grid Corporation of India Limited (POWERGRID) to implement two major transmission projects. These are the 400kV Lessos-Loosuk line with a substation at Loosuk, and the 220kV Kisumu-Kakamega-Musaga line with substations at Kakamega and Musaga.
Valued at an estimated $311 million (Sh40 billion), the projects will be designed, financed, built, operated and maintained by private partners, making them Kenya’s first Independent Power Transmission projects.
Beyond financing, PPPs can significantly accelerate project delivery. Private partners bring global technical expertise and robust project management to complete projects on time, minimising potential cost overruns associated with the conventional (Engineering Procurement and Construction)procurement process. In the energy sector, this translates into a stronger grid, fewer outages, faster integration of renewable energy and more connections to initially unserved load centres.
Beyond energy, Kenya has significant untapped potential for PPPs across multiple sectors—renewable energy generation, water and sanitation, housing and digital infrastructure. These sectors are well suited to partnerships that mobilise private capital while maintaining public oversight of strategic assets.
Public private partnerships must therefore be carefully structured to safeguard public interest, ensure affordability and deliver value for money. Experience from Kenya and other emerging economies shows that, when well designed, PPPs help preserve fiscal space, accelerate infrastructure delivery and enhance service quality.
Kenya’s development challenge is less of a shortage of strategic ambition or ideas and more of the need to finance and deliver infrastructure in a fiscally responsible, efficient and inclusive manner.
Acting managing director of Kenya Electricity Transmission Company (Ketraco)
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