Kenya has urged fellow African nations to aggressively pursue private sector funding for critical infrastructure, as traditional debt avenues dry up, highlighting a strategic pivot towards public-private partnerships (PPPs) to drive continental trade and economic resilience.
Deputy President Kithure Kindiki, speaking this week at the Intra-African Trade Fair (IATF) in Algiers, said PPPs are essential to develop railways, roads, and digital networks needed to unlock the potential of the African Continental Free Trade Area (AfCFTA).
“With shrinking fiscal space for debt, including foreign debt, we must pioneer innovative ways for raising revenue. One model that has proven successful is public-private partnerships,” Kindiki said.
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The push comes as Africa grapples with mounting debt distress. The International Monetary Fund (IMF) estimates that over half of sub-Saharan African countries are at high risk of debt distress or already in crisis, severely constraining their ability to fund development through borrowing.
The call for private investment is intrinsically linked to the fortunes of the AfCFTA, which aims to create the world’s largest free trade area by connecting 1.3 billion people across 55 countries with a combined GDP of $3.4 trillion. However, its success is hampered by notoriously low intra-African trade, which the United Nations Economic Commission for Africa (UNECA) estimates at just 14.4 per cent of total African trade, compared to over 60 per cent in Europe and Asia.
A key obstacle is a lack of interconnected infrastructure. To address this, Kindiki cited ongoing Kenyan negotiations to extend its Chinese-built Standard Gauge Railway (SGR) to Uganda and eventually the Democratic Republic of Congo, projects envisioned to be funded through PPPs.
Beyond physical infrastructure, Kindiki emphasized modernizing financial systems to support cross-border trade. He pointed to the Pan-African Payment and Settlement System (PAPSS), a centralized financial market infrastructure developed by the African Export-Import Bank (Afreximbank).
PAPSS allows for real-time settlement of commercial transactions in local currencies, reducing the continent’s heavy reliance on the US dollar and other hard currencies, which adds an estimated $5 billion annually in transaction costs to African trade.
“Modernising our financial institutions to allow real-time settlement in local currencies is key to spurring trade under the AfCFTA,” Kindiki said.
Kenya’s stance reflects a broader continental reassessment. At a time of escalating global trade tensions and supply chain disruptions, African economies are looking inward to drive growth and insulate themselves from external shocks.
“Private sector money is crucial in providing public services,” Kindiki stated, adding that future infrastructure programmes must “ensure the participation of women and young people.”
The move towards PPPs signals a fundamental shift in development finance strategy across Africa, as nations seek sustainable alternatives to debt-driven models and work to build the integrated, self-sufficient trade network envisioned by the AfCFTA, analysts say.
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Kenya has urged fellow African nations to aggressively pursue private sector funding for critical infrastructure, as traditional debt avenues dry up, highlighting a strategic pivot towards
public-private partnerships
(PPPs) to drive continental trade and economic resilience.
Deputy President Kithure Kindiki, speaking this week at the Intra-African Trade Fair (IATF) in Algiers, said PPPs are essential to develop railways, roads, and digital networks needed to unlock the potential of the African Continental Free Trade Area (AfCFTA).
“With shrinking fiscal space for debt, including foreign debt, we must pioneer innovative ways for raising revenue. One model that has proven successful is public-private partnerships,” Kindiki said.
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on WhatsApp
The push comes as Africa grapples with mounting debt distress. The International Monetary Fund (IMF) estimates that over half of sub-Saharan African countries are at high risk of debt distress or already in crisis, severely constraining their ability to fund development through borrowing.
The call for private investment
is intrinsically linked to the fortunes of the AfCFTA, which aims to create the world’s largest free trade area by connecting 1.3 billion people across 55 countries with a combined GDP of $3.4 trillion. However, its success is hampered by notoriously low intra-African trade, which the United Nations Economic Commission for Africa (UNECA) estimates at just 14.4 per cent of total African trade, compared to over 60 per cent in Europe and Asia.
A key obstacle is a lack of interconnected infrastructure. To address this, Kindiki cited ongoing Kenyan negotiations to extend its Chinese-built Standard Gauge Railway (SGR) to Uganda and eventually the Democratic Republic of Congo, projects envisioned to be funded through PPPs.
Beyond physical infrastructure, Kindiki emphasized modernizing financial systems to support cross-border trade. He pointed to the Pan-African Payment and Settlement System (PAPSS), a centralized financial market infrastructure developed by the African Export-Import Bank (Afreximbank).
PAPSS allows for real-time settlement of commercial transactions in local currencies, reducing the continent’s heavy reliance on the US dollar and other hard currencies, which adds an estimated $5 billion annually in transaction costs to African trade.
“Modernising our financial institutions to allow real-time settlement in local currencies is key to spurring trade under the AfCFTA,” Kindiki said.
Kenya’s stance reflects a broader continental reassessment. At a time of escalating global trade tensions and supply chain disruptions, African economies are looking inward to drive growth and insulate themselves from external shocks.
“Private sector money is crucial in providing public services,” Kindiki stated, adding that future infrastructure programmes must “ensure the participation of women and young people.”
The move towards PPPs signals a fundamental shift in development finance strategy across Africa, as nations seek sustainable alternatives to debt-driven models and work to build the integrated, self-sufficient trade network envisioned by the AfCFTA, analysts say.
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By Brian Ngugi