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The Role of the Private Sector in Economic Growth

  Nov 8, 2019
 

The future of African economies will largely be dependent on the performance of the private sector. The world over, the private sector is a key determinant of economic growth and development, therefore the public and private sectors must work together.

According to the Economy Survey 2019 Report by the Kenya National Bureau of Statistics, the private sector in Kenya accounts for 69.5% of the total employment in the country.
Kenya’s Vision 2030 aims to transform Kenya into a middle-income country by the year 2030; to achieve this vision, the country needs to invest heavily in public infrastructure and services. Hence the adoption of the Public-Private Partnership (PPP) unit, a framework that aims to improve the quantity, quality, cost-effectiveness and timely provision of public infrastructure and services.

To sustainably deliver on development projects, Kenya has several options to finance projects without resorting to further borrowing. The most viable option is public-private partnerships. However, this requires a very strong legal framework to protect and guarantee investor’s returns on investment.

The adoption of the PPP unit framework is meant to involve the private sector in bridging the infrastructure and financial gaps and subsequently achieve sustainable development in the country.
Speaking at Strathmore University Business School media policy breakfast, Architect Lee Karuri said “the private sector is a key partner to government in the growth and development of the economy. “Some of the major concerns of the private sector are sustainable revenue mobilization, budgeting, and expenditure by the government.”

Over the last decade, the government’s fiscal expenditure has been rising faster than the collected revenue. The budget deficit exceeds Kshs. 600 billion and each year, the government sets it higher. This has been one of the main drivers of public debt, as the government borrows to compensate for the short-falls. Through Public-Private Partnerships, the government can reduce foreign borrowing and the risks associated with it.

PPPs can moreover lead the way in innovation and provide a new source of capital required for infrastructure projects, thus reducing the funding gap for infrastructure projects. Furthermore, Public-Private partnerships reduce the burden and taxpayers and significantly reduce corruption and resource wastage.

Learn more on our public-private partnerships programme here>> http://bit.ly/2qgBdhT



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