This archive report was first published on 21 July 2019.
The Kenyan government's ambitious plan to tap into pension funds to finance infrastructure projects under the Big Four Agenda appears uncertain, with fund managers expressing concerns over the high risks involved.
According to the plan, the $15.3 billion pension funds were to be directed towards projects under the Big Four Agenda, including manufacturing, food security, universal health coverage, and affordable housing, under the public-private partnership (PPP) model.
However, despite the government's optimism, pension fund managers have developed cold feet over fears that investing in infrastructure projects would expose retirees' money to uncertain returns.
Stanley Kamau, National Treasury acting director-general for Public Investments and Portfolio Management, had earlier stated that there are 'a pipeline of opportunities to invest under the PPPs programmes and pension funds can benefit from the stable and attractive long-term returns that can be obtained by investing in infrastructure PPP projects.'
But, as The EastAfrican has learnt, a number of fund managers have expressed their reluctance to invest in infrastructure projects, citing the complexity of structuring and the long-term nature of returns.
Shem Ouma, RBA chief manager and head of research and strategy, admitted that the lack of success in any PPP project is one of the reasons pension funds investment in infrastructure has been capped at 15 per cent to protect retirees' money.
Despite the government's plans to mobilise funds for affordable housing, particularly for the construction of 500,000 housing units promised under the Big Four Agenda, pension schemes are no longer interested in infrastructure projects.
However, Zamara Group chief executive Sundeep Raichura stated that the 14 large pension fund managers that have formed a consortium to pool funds and invest in capital-intensive projects have not dropped their plans.
But, the funds congregating around the Kenya Pension Fund Investment Consortium have no intention of committing more than five per cent of their assets to the PPP class.
