The Government will reach out to the private sector to finance and develop mega infrastructure projects.
The partnership will focus on developing energy generation and building infrastructure including roads, housing and even waste management facilities.
Treasury Cabinet Secretary Henry Rotich said the demand for infrastructure was growing at a speed that Government financing might not be able to keep up with, and public-private-partnerships (PPP) would be among the few options available.
"The Government will continue to target high-priority infrastructure projects that maximise the welfare of Kenyans. Some of these projects will be funded by donors or PPP arrangements," Mr Rotich told Parliament when he delivered the 2017-2018 Budget Statement yesterday.
"Although we continue allocating significant resources in the budget for infrastructure development, the funds are never enough to finance infrastructure development," he added.
He said PPPs as well as donors would help to bridge the existing infrastructure funding gap in energy generation, road expansion and construction of hostels for various training institutions as well as affordable housing in urban centres and the management of solid waste.
The PPP model of financing and operating infrastructure might see the cost passed to ordinary Kenyans who use the projects.
This can be seen in recent proposals to have investors finance and operate roads that would then have toll stations.
Among the priority areas the Government is investing in are roads. Rotich said about 2,000km had been built since 2013.
He added that there were plans to build another 7,000km, some of which were already being worked on.
"To further enhance the movement of Kenyans, ease the transportation of goods and reduce congestion on our roads, I have allocated a total of Sh134.9 billion, which includes Sh63.6 billion for on-going road construction, Sh44.3 billion for foreign-financed roads, and Sh27 billion for low-volume seal roads. Further, I have allocated Sh49.3 billion for road maintenance from the Road Maintenance Levy," said Rotich.
Over the next financial year, the Government will spend a substantial amount of money on ensuring ongoing projects are completed.
Other priority projects include the second phase of the Standard Gauge Railway from Nairobi to Naivasha and oil exploration.
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