Written By Lisa Murimi
Government suppliers owed a staggering Ksh 110 billion may soon see relief through a bold new proposal involving the private sector.
Spearheaded by leaders from the pension and insurance sectors, this plan aims to establish a privately owned fund to address the mounting debt and offer a lifeline to struggling contractors and suppliers.
Unveiled during the launch of Kenya’s first Sharia-compliant bond at the Nairobi Securities Exchange, the proposal suggests a public-private partnership (PPP) model.
Under this innovative scheme, pension and insurance companies would invest their pooled resources into government debt, with repayments made on agreed-upon terms. This approach seeks to provide essential capital to the government without incurring additional debt or raising taxes.
The government’s pending bills crisis, revealed by the pending bill verification committee, has strained its financial commitments. By offering immediate payment to contractors in exchange for waiving accrued interest, pension and insurance players hope to ease government cash flow pressures while reducing credit risks.
Key proponent Hosea Kili, CEO of CPF Financial Services Ltd, advocates for a reverse factoring model, which would allow suppliers to receive early payments from financiers.
The fund, managed under special purpose acquisition vehicle regulations, will include resources from pension schemes, insurance contracts, and international investors.
If approved, this proposal could set a precedent for future government financing strategies by leveraging private sector resources to resolve public sector challenges.
