U.S pension investors eye Kenya’s infrastructure

By Chacha Mwita

The country is seeking investors in energy, roads, water and housing projects

Kenya is hosting over 30 representatives of major U.S. pension and asset management funds on an initial mission to evaluate the investment potential and opportunities in infrastructure projects.

The team is being hosted by the Kenya Pension Fund Investment Consortium (KEPFIC) on a three-day fact finding mission.

Collectively, these funds manage assets worth Sh100 trillion (US$1 trillion).

The visit is supported by the U.S. National Association of Securities Professionals, the World Bank, and the U.S. government, through USAID.

“By moving from traditional investments in stocks and bonds to new opportunities in Kenyan roads, power plants and enterprises, Kenyan and U.S. pension funds will strengthen commercial ties between our countries. These investments will benefit both countries and enhance the economic security of Kenyan and American retirees,” said U.S. Ambassador to Kenya Kyle McCarter in a statement.

Historically, infrastructure development has been financed by the public sector. The country’s current financing gap for infrastructure stands at about Sh400 billion, a gap that could be bridged by increased participation of the private sector.

During the mission, executives from the U.S. pension and asset management funds will discuss opportunities with KEPFIC and its membership of 12 Kenyan leading fund managers, which currently manage Sh 200 billion in assets.

Projects to be financed under this partnership would include roads, water and sanitation, energy and affordable housing, an initiative that will go a long way in supporting achievement of the Big Four Agenda for national development.

“The new partnership represents a good match for the country and signals a new development in the landscape of Kenyan infrastructure investment. This represents an exciting model which has been successfully executed in emerging markets and could fill the existing infrastructure financing gap in Kenya, and Africa,” the U.S Embassy said.

The U.S. delegation is led by Mobilizing Institutional Investors to Develop Africa’s Infrastructure (MiDA), a partnership between the U.S. National Association of Securities Professionals (NASP) and the United States Agency for International Development (USAID) to increase private sector capital into infrastructure investments in Sub-Saharan Africa.

Since 2017, MiDA members have closed on new deals totaling close to US$800 million(Sh80.6 billion )focusing in Africa and other emerging markets.

“Our delegation of US institutional investors comes to Kenya with a keen interest to explore investment opportunities in the region. While there is currently limited exposure in Kenya, there is great opportunity to scale up these investments. We are looking forward to advancing our discussions with our Kenyan counterparts at KEPFIC for mutual support and benefit” said Donna Sims Wilson, President of Smith Graham and Chair of NASP.

KEPFIC says it has received proposals for a wide range of infrastructure investments, including energy, roads, water and affordable housing.

“Even as we work to ensure KEPFIC is properly structured with the highest governance standards and an appropriate investment strategy, we are excited at the prospect of partnering with US pension funds for investing in infrastructure and other alternative investments,” said Sundeep Raichura, Zamara’s Group Chief Executive, a member of KEPFIC.

The World Bank and NASP signed a partnership in 2017 to build the capacity of Kenyan institutional in understanding the risks, requirements, and rewards for private sector investments in infrastructure through a series of workshops held in Nairobi.

“The World Bank Group is committed to supporting infrastructure development in Kenya and this new model represents a comprehensive approach of leveraging private investments,” said Felipe Jaramillo, World Bank Kenya Country Director.

Logistical support for this initiative has also been provided by the United Nations Economic Commission for Africa and StanBic Bank.

World Bank Group support for the Kenyan pension sector is made possible with support from the Government of Japan and Financial Sector Reform and Strengthening Initiative (FIRST)Trust Fund.

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