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Leveraging domestic capital to fund PPPs
Our analysis indicates that by adopting this model, Kenya can position PPPs to account for up to 30 percent of national development expenditure in the medium term.
Public-Private Partnerships (PPPs) are a transformative mechanism for financing critical infrastructure and public services, harnessing private sector expertise and capital to accelerate national development.
Since 2013, Kenya has successfully mobilised approximately Sh140.7 billion in private capital through PPPs. Yet, despite this achievement, the full potential of domestic capital remains largely untapped.
As of December 31, 2024, Kenya's retirement benefits assets under management reached Sh2.25 trillion.
However, domestic capital—particularly pension funds, insurance funds, Sacco savings, collective investment schemes and Islamic finance assets—has played a minimal role in PPP financing.
Pension schemes, for instance, are predominantly invested in low-risk, short-term assets, with 52.5 percent allocated to government securities and 19.4 percent to guaranteed funds, while investments in PPP infrastructure remain negligible.
This significant underutilisation of domestic capital represents a missed opportunity.
Pension and insurance assets, inherently long-term in nature, are perfectly suited to finance large-scale infrastructure projects that require stable, patient capital.
Increasing their participation in PPPs would not only ensure a sustainable, self-reliant approach to infrastructure financing, but also reduce over-reliance on foreign capital.
However, despite their proven potential, PPPs in Kenya face persistent challenges, including regulatory, financial and institutional barriers that restrict effective mobilisation of domestic capital.
Addressing these barriers is critical to unlocking the power of local financial markets in supporting Kenya's infrastructure agenda.
The National Treasury appointed the Committee of Experts (CoE) on Leveraging Local Financial Markets for PPP Financing on February 3, 2025.
The CoE mandate was to explore, design and recommend strategic policies, legal reforms, and practical solutions to accelerate the mobilisation of domestic capital for PPPs. Following extensive research, stakeholder consultations, and global benchmarking, we finalised our report and submitted it to Principal Secretary, National Treasury, Chris Kiptoo on May 16, 2025.
The CoE’s overarching recommendation is the establishment of the PPP Implementation Trust Fund (PPP-ITF)—a centralised vehicle designed to pool domestic capital and deploy it in bankable infrastructure projects.
The PPP-ITF would aggregate funds from pension schemes, insurance companies, Saccos, collective investment schemes and Islamic finance assets, providing a secure, professionally managed platform for sustainable infrastructure investment.
This is not a theoretical model. Our report analysed over 50 successful global case studies, including the United Kingdom’s Pensions Infrastructure Platform (PiP).
The PiP has successfully mobilised pension fund capital for national infrastructure, offering a structured, cost-efficient investment vehicle with strong governance and transparent operations.
This model is akin to how Umbrella Pension Schemes operate in Kenya. By adapting these lessons, Kenya’s PPP-ITF can transform local financial markets into a powerful engine for growth.
Beyond the PPP-ITF, the CoE report contains a raft of other recommendations designed to transform Kenya’s PPP landscape—addressing policy, regulatory, and institutional reforms aimed at enhancing transparency, investor confidence, and project sustainability. These recommendations are now under review by the National Treasury.
Our analysis indicates that by adopting this model, Kenya can position PPPs to account for up to 30 percent of national development expenditure in the medium term. This will reduce reliance on foreign financing and empower local investors to take a central role in infrastructure development.
This is the vision of a New Kenya for Public-Private Partnerships (PPPs) – a nation where domestic capital is the engine powering sustainable infrastructure development. Our commitment to leveraging local resources ensures that Kenyans are not just passive beneficiaries but active investors in the nation’s growth.
The time to act is now.
The writer is Chairman, Commitee of Experts on Leveraging Local Financial Markets for Investments into Public-Private Partnerships Implementation
