Kenya’s infrastructure financing landscape is gradually shifting as the government seeks to mobilize private capital for projects traditionally funded through public resources. The Public Private Partnerships (PPP) Directorate reports that Kenya mobilized Kshs 17.7 bn in private capital during FY2024/25, highlighting the growing role of private investment in infrastructure development.
The shift is significant for investors because infrastructure provides exposure to real assets supporting essential economic activity. Roads, electricity transmission and water systems can potentially generate relatively stable long-term cash flows where projects have appropriate contractual and regulatory structures. A notable example is the Kshs 40.4 bn electricity transmission PPP involving KETRACO, Africa50 and PowerGrid. The transaction demonstrates how private capital can participate in critical infrastructure while reducing reliance on conventional government borrowing.
For pension funds, insurers and other institutional investors, infrastructure can offer an investment horizon that aligns with long-term liabilities. This is particularly relevant for the National Social Security Fund (NSSF), which is seeking to diversify its portfolio while generating sustainable long-term returns. NSSF’s participation in the Nairobi–Rironi toll-road project provides an example of pension capital being allocated towards infrastructure with the potential for recurring income over an extended period. Such investments can complement traditional assets such as Treasury bills and other fixed-income securities while providing exposure to real assets.
With Infrastructure investments Investors remain exposed to construction delays, cost overruns, demand assumptions, regulatory changes, foreign exchange movements and the financial strength of project counterparties. The structure of a PPP is therefore critical to its investment characteristics. Investors need to assess how revenues will be generated, whether tariffs can be adjusted, how construction and operational risks are allocated, whether government guarantees are available and how foreign exchange exposure is managed.
This distinction becomes increasingly important as Kenya seeks to attract additional private capital into infrastructure. Project size alone does not determine investment attractiveness. A smaller project with transparent revenue arrangements, strong counterparties and clearly allocated risks may offer a superior risk-adjusted return to a larger project with uncertain cash flows.
The expansion of PPPs therefore represents more than an alternative method of financing public infrastructure. It could gradually broaden the universe of real assets available to private and institutional capital. For investors, the opportunity will ultimately depend on identifying projects where essential economic activity is supported by bankable cash flows, credible counterparties and appropriately allocated risk.
