Effect of Public Private Partnership on Road Infrastructure Development in Kenya

Abstract

The growing necessity to provide a set of infrastructures (such as schools, hospitals, roads and railways) required by both the society and the economical agents, along with the budgetary constraints to reduce the public debt, has resulted into govern The growing need to avail infrastructures (such as schools, hospitals, roads and railways) required by both the populace and the economic agents, along with the resource constraints to reduce the national debt, has resulted into government’s seeking private sector participation in provision of these infrastructures. The Public Private Partnership (PPP) depicts a new contractual arrangement in which the public interest of getting the value for money to maximum level goes in tandem in with the private sector goal which is to obtain the maximum profit possible. The aim of this study was to analyze the effect of Public and Private Partnership on road infrastructure development in Kenya. The study was therefore aimed at answering the question as to whether the adoption of PPPs has impacted on road infrastructure development in Kenya. Transaction costs theory, agency theory and exchange theory were the anchor theories in the research. The research design adopted in the study was descriptive. The population of the research incorporated all the infrastructure projects undertaken in Kenya from 2007 to 2017. There were 185 road construction projects implemented within the period of study. Data used in the study was from secondary sources sourced from the National treasury on infrastructure projects, State Department of Infrastructure - Kenya National Highways Authority and from KNBS. The analysis of the data was done by both descriptive and inferential statistics were used to analyze. The presentation of the data analyzed was in tables’ format. The results of the correlation analysis revealed that road infrastructure development was positively associated with Cost of financing road infrastructure projects using PPP where r = 0.752 and a level significance of 0.008 implying an indication that it was significant statistically with p value < 0.05. The findings also revealed correlation being positive on road infrastructure development and return on investment since r = 0.373 and level significance of 0.059, an indication that it was statistically significant. The correlation analysis finally revealed that road infrastructure development had a positive relation with length of completed roads in kilometers with r = 0.270 and 0.022 significance level. Findings from showed that The coefficient of determination through regression analysis showed that 58.9% of the disparities on road infrastructure development can be explained by Cost of financing road infrastructure projects using PPP, return on investment and length of completed roads in kilometers. The remaining 41.1% implies that other variables not analyzed in this study were responsible for them. Since R square and adjusted R were above average, this implies that the model can explain such variation. This indicates that the tested variables were significant in explaining the variation in road infrastructure development in Kenya. The study concluded that cost of financing road infrastructure projects using PPP is a major contributor to road infrastructure development in Kenya. This was based on the observation that it had a high correlation with road infrastructure development. The study also recommended that in the selection of PPP partners, the government should consider the cost of financing through negotiations and the duration for financing. This will help in reducing the cost of PPP while promoting development. It was lastly recommended that a study be done on determinants of the PPP choice to which this study did not cover.