PPP Projects in Kenya: Investor Guide

Public-private partnership projects can involve long procurement periods, public approvals, finance documents and allocation of construction, operating and political risk. Kenya’s Public Private Partnerships Act 2021 provides the framework, but each project must be assessed against its own procurement documents, approvals and commercial assumptions.

What should an investor examine first?

The procuring authority, project mandate and procurement route.
The project agreement, risk allocation and required government approvals.
Land, environmental, regulatory and community requirements.
The proposed revenue model, payment security and currency exposure.
Conditions for financing, step-in rights, termination and dispute resolution.

Why the legal structure matters

A project may require a Kenyan project company, approvals for foreign investment, tax and customs analysis, permits, insurance and employment planning. Lenders will usually review the procurement record, security package, direct-agreement terms and enforceability of the project documents. These matters should be reviewed before a bid position is fixed or funds are committed.

Plan for change and disputes

Infrastructure projects can be affected by variations, delay, exchange-rate pressure, regulatory change and performance disputes. The contract should address notice, relief, payment, records, escalation and the selected dispute forum. A carefully drafted process does not remove risk, but it gives the parties a clearer way to manage it.

The project cycle

A Kenyan PPP is not a single contract. It is a procurement and approval process that normally runs from project identification and feasibility through structuring, procurement, contract signature, financial close, construction, operation and handover. The Public Private Partnerships Act 2021 sets the framework and the institutions involved, but the sequence and the approvals for a particular project are set by the procuring authority, the project documents and the applicable regulations.

Investors should map the process before bidding: who identified the project, whether a feasibility study has been approved, which procurement method is proposed, what the evaluation criteria are, which approvals are still outstanding and what conditions must be satisfied before financial close.

The procurement record before bidding

Before a bid position is fixed, read the request for proposals, the draft project agreement and the evaluation criteria together. Inconsistencies between those documents are a common source of later dispute, and a bid that responds to one without addressing the others creates a mismatch the procuring authority may score against the bidder.

Confirm which approvals have been obtained, which remain conditions precedent and who bears the risk of delay. A project that looks sound in the feasibility study can still fail at financial close if one condition sits outside the investor’s control and no fallback is agreed. Where a government support or payment security is promised, read the document that actually creates it, not only the description in the information memorandum.

Institutions and approvals

The procuring authority develops and runs the project. The PPP Directorate, within the National Treasury, provides technical oversight and the approval framework. Other approvals may be required from land, environment, sector regulators, county government, competition authorities or Cabinet, depending on the project. The contract should record which party is responsible for each approval and what happens if an approval is delayed or refused.

Unsolicited proposals

The Act provides a route for unsolicited proposals, but it is not an alternative to a competitive process. An unsolicited proposal may be considered only if it meets the statutory conditions and the procuring authority decides to proceed. The proponent should not assume that developing the concept gives it a right to the contract, and should protect its intellectual property and confidential information before submitting.

The courts have considered how the Act treats privately initiated proposals. In Katiba Institute v National Assembly and others [2025] KEHC 6358 (KLR), the High Court considered a petition challenging, among other things, the discretion over whether a privately initiated proposal should be subjected to open competitive tendering. The case illustrates why the statutory conditions and any procurement safeguard should be checked for the specific project.

Bankability and risk allocation

Lenders will focus on the bankability of the project, not only the legal validity of the contract. The key questions usually include:

Is the revenue stream clear, and who bears demand or volume risk?
Are tariffs, availability payments or usage payments fixed, indexed or subject to review?
Who bears construction, delay, exchange-rate, inflation and regulatory-change risk?
What security, guarantees, direct agreements or step-in rights are available?
Is the termination compensation regime bankable, and when is it payable?
How are variations, force majeure, change in law and dispute resolution handled?
Is the dispute forum enforceable, and can foreign awards be enforced in Kenya?

Financial close usually depends on more than the project agreement. Land access, environmental approvals, counterparty credit, payment security and the lender’s direct agreement all have to align, and a single unresolved condition can hold up the whole financing. Map each condition, its owner and its realistic timing before committing to a completion date.

Due diligence checklist

Confirm the procuring authority’s mandate and the project’s approval status.
Read the procurement documents, draft contract and evaluation criteria together.
Check land tenure, way leaves, environmental and social approvals.
Model the tax, customs, foreign-exchange and repatriation position.
Check the security package and the lender’s direct agreement requirements.
Identify every condition precedent to financial close and who controls it.
Plan the dispute route before signing, not after a problem arises.

See our project finance and infrastructure practice for related guidance. Contact the firm for a confidential discussion about a project or bid.

Primary sources: Public Private Partnerships Act 2021; National Treasury and Economic Planning (PPP Directorate); Katiba Institute v National Assembly and others [2025] KEHC 6358 (KLR).

project finance and infrastructure lawyers in Nairobi. Related reading: joint ventures with Kenyan partners · an immigration checklist for foreign investors · construction arbitration in Kenya.

This article is general information, not legal advice.