Public-Private Partnerships in Kenya: How PPPs Are Building Roads, Hospitals, and Housing Across the Country

Public-Private Partnerships have become a central mechanism for addressing Kenya's massive infrastructure deficit, with the National Treasury targeting KES 293.6 billion through PPP projects in the 2025/26 financial year to reduce domestic borrowing and accelerate development. From the landmark USD 668 million Nairobi Expressway that slashed cross-city travel times from two hours to 20 minutes, to geothermal power plants and affordable housing developments, PPPs are reshaping how Kenya finances and delivers public infrastructure and services.

Kenya's PPP framework, governed by the Public Private Partnerships Act 2021, is regarded as one of the more developed in Africa. With approximately 37 PPP projects in various stages — 5 operational valued at KES 123.1 billion, 8 under implementation, and 29 in the pipeline — understanding how PPPs work, what opportunities they create, and what risks they carry is essential for investors, contractors, and citizens interested in Kenya's infrastructure future.

How PPPs Work in Kenya

A Public-Private Partnership is a long-term contractual arrangement between a government entity and a private sector company to finance, design, build, operate, and maintain public infrastructure or deliver public services. The private party invests capital and expertise in exchange for revenue streams — typically user fees (like toll road charges), availability payments from the government, or a combination of both. PPP contracts typically run 15 to 30 years, allowing private investors to recoup their investment over the asset's operational life.

Kenya's PPP framework is managed by the PPP Directorate under the National Treasury's State Department of Public Investments and Assets. The 2021 Act introduced a streamlined single approval process, enhanced private sector participation mechanisms, and clearer risk allocation frameworks that have significantly strengthened investor confidence. Projects follow a structured lifecycle: identification, feasibility study, approval by the PPP Committee, procurement of a private party, financial close, construction, and operation.

Major Operational PPP Projects

The Nairobi Expressway is Kenya's most visible PPP success story. The 27-kilometre elevated toll road, built by China Road and Bridge Corporation under a Build-Operate-Transfer model, connects Jomo Kenyatta International Airport to Westlands, serving approximately 50,000 vehicles daily. The project demonstrates the PPP model's ability to deliver complex urban infrastructure rapidly while transferring construction and traffic risk to the private sector. The expressway has become a case study in replicable PPP success factors for infrastructure across Africa.

Road Annuity Programme projects include the Ngong-Kiserian-Isinya and Kajiado-Imaroro roads (Lot 33), completed in April 2020 and operational since May 2020. Under this model, the private sector finances and constructs roads, with the government making annual "annuity" payments over the contract period — effectively spreading the capital cost over time rather than requiring upfront government funding.

Projects Under Construction and in Pipeline

The Usahihi Expressway (Nairobi-Mombasa) is one of Kenya's most ambitious planned PPPs. The USD 3.5 billion project would build a modern expressway connecting Nairobi to the coast, slashing travel time from up to 12 hours to approximately four and a half hours. The feasibility study was nearing completion as of May 2025, which would lead to formal approval from the National Treasury PPP Unit and progression to procurement of a private partner.

Energy sector PPPs include the 35 MW Quantum Geothermal Power Plant, which was 60 percent complete as of mid-2025, and the Orpower22 Geothermal Power Plant at 57 percent completion with construction commenced in October 2024. These projects leverage Kenya's world-class geothermal resources through private sector investment, with electricity sold to Kenya Power under long-term Power Purchase Agreements.

Housing and education PPPs reflect the model's expansion beyond traditional infrastructure. The University of Nairobi Purpose-Built Student Accommodation project will deliver approximately 4,000 hostel beds under a 30-year Design-Build-Finance-Operate-Transfer model, with feasibility approved in February 2025. The Athi River Affordable Housing project seeks approximately KES 9.2 billion in private investment to build 2,320 units in the first phase, supporting the government's affordable housing agenda.

Agricultural PPPs include the Galana-Kulalu Food Security Project, valued at approximately KES 12.5 billion, aiming to bring 20,000 acres under agricultural production annually. The project achieved commercial close in December 2024, marking a significant milestone for agriculture-sector PPPs in Kenya.

The Legal and Institutional Framework

The PPP Act 2021 establishes a clear institutional structure. The PPP Committee, chaired by the Cabinet Secretary for National Treasury, provides strategic oversight and approves projects at key milestones. The PPP Directorate serves as the technical arm, providing expertise in project structuring, procurement, and monitoring. Contracting authorities — government ministries, departments, agencies, and county governments — identify and sponsor specific projects. The framework allows for both government-initiated projects and unsolicited proposals from the private sector, with appropriate competitive tension mechanisms for unsolicited bids.

Risk allocation is central to successful PPPs. Typically, construction risk, operational performance risk, and demand risk (for user-pay models) are allocated to the private party, while political risk, regulatory risk, and certain force majeure risks are retained by the government. Clear risk allocation, enshrined in detailed project agreements, is what differentiates PPPs from traditional procurement and makes them attractive to private investors who can manage specific risks more efficiently than government.

Financing PPPs: Mobilizing Domestic Capital

In early 2025, the National Treasury established a Committee of Experts to explore ways to mobilize long-term capital from local financial markets to fund PPP projects. The committee's final report, delivered in May 2025, recommended establishing a PPP Implementation Trust Fund to pool domestic savings and investments, creating bond instruments specifically designed for infrastructure PPPs, and engaging pension funds and insurance companies as long-term investors in PPP projects.

These recommendations address a structural challenge — most PPP financing in Kenya has relied on international development finance institutions and foreign commercial lenders, exposing projects to foreign exchange risk. Developing domestic capital sources would reduce currency exposure, deepen Kenya's capital markets, and give local institutional investors access to infrastructure returns that are typically stable and inflation-linked.

Challenges and Opportunities

Despite Kenya's relatively advanced PPP framework, challenges persist. Project preparation costs are high, and many pipeline projects stall at the feasibility stage due to funding gaps. The PPP Directorate has unveiled over 30 high-impact projects across health, housing, water, and energy, but converting these from pipeline to implementation requires sustained political commitment, adequate government capacity, and bankable project structures that attract private capital. For investors and contractors, Kenya's PPP pipeline represents significant opportunity — provided they understand the regulatory framework, build relationships with contracting authorities, and bring relevant sector expertise and financial capacity to the table.