President Ruto scouts for public-private partnership deals on China tour

President William Ruto is hunting for public-private partnerships with Chinese firms amid growing concerns that some of the uncompleted Chinese-funded infrastructure projects, including the railway, could become white elephants.

Dr Ruto, who is visiting China, on Monday oversaw the signing of a memorandum of understanding with two Chinese entities, China Energy International Group and telecommunications giant Huawei.

He sought to woo Chinese firms to take advantage of opportunities presented by Kenya’s energy and ICT sectors.

“Kenya is a great champion of renewable energy and that is why our grid is almost 93 percent renewable and that is a deliberate decision made. I’m very happy you have technology that can work with us for leverage on our renewable assets,” he told Chinese investors.

“We want to persuade you and your company to look at opportunities of working with us as the government of Kenya to unlock the opportunities of energy as part of enhancing the energy pool not just in Kenya but also in our region.”

Dr Ruto’s visit comes on the back of a renewed quest by the government to deepen trade and economic relations with the Far East’s economic powerhouse. Scheduled meetings during the three-day trip to China are also expected to feature discussions on deals unlocking new financing for infrastructure projects including roads.

Read: President Ruto’s Silicon Valley trip excites Kenyan start-ups

But the details of the deals remain scanty as his entourage was tight-lipped.

China has largely paused new funding to Kenya in recent years following the completion of the second phase of the multi-billion shilling standard gauge railway (SGR) project.

Last week, Deputy President Rigathi Gachagua indicated the President would seek new funding to complete stalled road projects.

It was not clear whether the new credit line would form part of the discussions during the President’s visit.

The MoU with China Energy International Group entails optimising the electrical power system, modernising power generation, transmission and distribution lines and substations.

The deal also covers utilising and unlocking the potential of renewable energy and advanced energy storage.

Huawei’s deal meanwhile sets the stage for collaboration on the development of ICT infrastructure in Kenya and the promotion of digitisation across sectors.

Public-private partnerships relate to agreements between public and private sector entities where the typical deal is deployed in the provision of a public asset or service.

The implementation of public-private partnerships in Kenya lies with the Public Private Partnerships (PPP) Directorate, which sits at the Treasury and is tasked with originating, guiding and coordinating the selection, ranking and prioritisation of public-private partnership projects within the public budget framework.

As of September 2021, the directorate had approved seven PPP projects in the energy and road sectors, including the Sh99.6 billion (Sh667.8 million) Nairobi Expressway Project.

The seven approved PPP projects have a total value of Sh181.6 billion ($1.2 billion) and are largely funded by a debt-equity mix.

Dr Ruto is also seeking to improve Kenya’s balance of payments with China by increasing fresh produce exports.

“We continue to look for opportunities to even trade between the two countries by exploring possibilities for exports from Kenya whether it’s our avocados, tea and macadamia. We are exploring possibilities in the sectors of livestock, both beef and leather products,” he added.

Data from the Kenya National Bureau of Statistics show China enjoys the balance of trade, with imports into Kenya standing at Sh452.6 billion in 2022 against exports of Sh27.5 billion.

Read: Ruto adopts Uhuru’s draft trade deal with America

Despite easing its financing, Kenya owed China Sh804.8 billion as of the end of June last year, making it the country’s leading bilateral creditor.

Most of the debt owed to China relates to projects under the Belt and Road Initiative and includes financing to the Nairobi Eastern and Northern Bypass Project, the Nairobi Southern Bypass, the Mombasa-Nairobi and Nairobi-Naivasha standard gauge railway projects.

→ (email protected)