MOI UNIVERSITY

ANALYSIS OF THE CHALLENGES FACING THE EFFECTIVENESS OF PUBLIC

PRIVATE PARTNERSHIPS IN KENYA: A STUDY OF MINISTRY OF TRANSPORT

AND INFRASTRUCTURE

PRESENTED BY: NDUNGU NJERI

REG NO: SHRD/PGDPM/201/14

A RESEARCH PRPOSAL/RSEARCH PROJECT SUBMITTED IN PARTIAL

FULFILLMENT OF THE REQUIREMNTS FOR THE AWARD DEGREE OF POST

GRADUATE DIPLOMA IN PROJECT PRLANNING AND MANAGEMENT,

DEPARTMENT OF QUANTITATIVE SKILLS AND ENTREPRENEURSHIP, MOI

UNIVERISTY

OCTOBER 2015

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DECLARATION

I declare that this project is my original work and has never been submitted for a degree

in any other university or college for examination/academic purposes.

Signature:………………………………….. Date:…………………………………

Ndungu Njeri Reg. No SHRD/PGDPM/201/14

SUPERVISOR’S DECLARATION

This research project has been submitted for examination with my approval as the University

Supervisor

Signature……………………………… Date………………………………….

Mr. Baraza Elias

Department of Quantitative Skills and Entrepreneurship

Moi University

Ii

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DEDICATION

This project is dedicated to my loving parents for taking me through the education journey. It is

also dedicated to my brothers, sisters and relatives for their encouragement and advice during the

project writing.

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ACKNOWLEDGEMENTS

First, my sincere gratitude goes to Our Almighty Father who by His grace I was able to do and

complete this study. Second, for the development and production of this work I feel a deep sense

of gratitude to my supervisor Mr. Baraza for his guidance and supervision. My further

appreciation also goes to all my friends and colleagues for their support throughout this

demanding journey.

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ABSTRACT

Public-private partnership (PPP) is a relatively new experience in most developing countries in Africa, Asia and South America. Many governments have considered various steps to promote PPPs in their countries to achieve positive impacts such as efficiency, equity and quality provision of the public services through increasing competition and active participation of the private sector as the appropriate instrument to attain such endeavor. In Kenya the growing interest in PPPs can be attributed to a number of factors, including tightening budgets, increased project complexity, better value for money, the desire to leverage private sector expertise and shifting public sector priorities. The objective of the study is to analyze the challenges facing the effectiveness of public private partnerships in Kenya. Specifically, the study is set to determine factors influencing the performance of Public-Private-Partnerships in the Infrastructure sector in Kenya and determine the extent to which such factors lead to success and effective performance of Public Private-Partnerships in Kenya. The research used a descriptive survey with the target population of 55 categories comprising of development agencies, organizations and parastatals located in Nairobi, Ministry of Devolution and Planning and Public-Private Partnership Unit at Treasury. The study used open and closed ended questions for data collection. The collected data will be analyzed using a combination of analytical and descriptive techniques. Data from questionnaires and interviews will be studied and comparison made using MS Excel and the SPSS software package (Statistical Package for Social Sciences). The study found that political and socio-economic factors like stable political system and affordability and favorable economic conditions affected the performance of Public Private Partnerships. The findings further revealed that risk management factors including appropriate risk allocation, type of agreements in the contract and guarantees from the governments affected the performance of Public-Private-Partnerships. Public Private Partnerships enabled the public sector to leverage more financial resources by using the private sector as an intermediary to great extent and Public-private Partnerships allowed the public sector to consider the implementation of the otherwise unaffordable infrastructure projects to a great extent.

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TABLE OF CONTENTS

DECLARATION.................................................................................................................ii

DEDICATION................................................................................................................... iii

ACKNOWLEDGEMENTS..............................................................................................iv

LIST OF TABLES .............................................................................................................v

ABBREVIATIONS AND ACRONYMS..................................................................... viii

ABSTRACT........................................................................................................................ix

CHAPTER ONE .................................................................................................................1

INTRODUCTION...............................................................................................................1

1.0 Overview……………….................................................................................................1

1.1 Background of the Study………................................................................................. 2

1.2 Statement of the Problem…………………..................................................................3

1.3 Objectives of the Study………..................................................................................... 4

1.3.1 General Objective…....................................................................................................6

1.3.2 Specific Objectives…...................................................................................................8

1.3.3 Research Questions ................................................................................................... 9

1.4 Justification of Study…………………………………………………………………..

1.5 Significance of Study………………………………………………………………….

1.6 Scope of Study…………………………………………………………………………

1.7 Ethical Considerations………………………………………………………………..

1.8 Limitations of Study…………………………………………………………………..

CHAPTER TWO.............................................................................................................

LITERATURE REVIEW...............................................................................................

2.0 Introduction...........................................................................................................................

2.1 Global perspective on the challenges facing the effectiveness of public private partnerships…

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2.2 Local perspective on the challenges facing the effectiveness of public private partnerships…

2.3 Issues related to challenges facing the effectiveness of public private partnerships………….

2.3.1 Enabling environments for investment and project finance…………………………………

2.3.2 Setting the framework……………………………………………………………………….

2.3.4 Project financing and financial modeling……………………………………………………

2.3.5 Due diligence……………………………………………………………………………….

2.4 Theoretical Framework…………………………………………………………………………

2.4.1 Theory of managing PPP projects…………………………………………………………….

2.4.2 Theory of institutional differences between partnering organizations……………………….

2.4.3 Principal-Agent Theory………………………………………………………………………

CHAPTER THREE........................................................................................................................

RESEARCH METHODOLOGY.................................................................................................

3.0 Overview………….....................................................................................................................

3.1 Study Area………………..........................................................................................................

3.2 Research Design...........................................................................................................................

3.3 Target Population.........................................................................................................................

3.4 Sampling Techniques and Sample Size………………………………………………………...

3.4.1 Sample Design………………………………………………………………………………..

3.5 Data Collection Procedures…………………………………………………………………….

3.5.1 Primary Data………………………………………………………………………………….

3.5.2 Secondary Data……………………………………………………………………………….

3.6 Data Presentation and Analysis………………………………………………………………...

3.8 Validity and Reliability…………………………………………………………………………

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CHAPTER ONE: INTRODUCTION

1.0 OVERVIEW

Public-Private Partnerships (PPPs) have been a high profile item on the public agenda over the

past two decades and PPP has been a popular global strategy for delivering new infrastructure

and services. From the perspective of the OECD, PPPs are now defined as long term contractual

arrangements between the government and a private partner whereby the latter delivers and

funds public services using a capital asset sharing the associated risk.

Governments in most developing countries continue to face the challenge to meet the growing

demand for new and better infrastructure and public services. As available funding from the

traditional sources and capacity in the public sector to implement many projects at one time

remain limited, governments have found that partnership with the private sector is an attractive

alternative to increase and improve the supply of these services.

Many aspects of PPPs have been researched and observed up to date. Notably there is

considerable knowledge on the economics of PPPs as well as on social and political aspects. The

global financial crisis of 2008 also added a major new dimension to the political and economic

environment and this has in some ways renewed and magnified previous debates and

controversies around PPP performance.

Since now that we have considerable knowledge from many empirical assessments of the

economics and finance of PPP projects along with evidence on other aspects of performance for

existing PPP projects we are able to trace the historical roots of PPP policy, appreciate political

and governance issues related to PPPs and discern the transfer and sharing of risks in PPP

projects.

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This study aims to sketch the lineage of today’s PPP research terrain and examine several major

dimensions and crucial areas needing attention in an effort to articulate a renewed PPP research

agenda for the future and a reference point for Kenya. This paper also builds on the previous

international reviews of the research agenda from scholars such Jomo K. S. & Chowdhury, A.

(2009) as well as Connolly and Wall (2009).

This paper investigates the challenges facing the effectiveness of public private partnerships in

Kenya and the actions the government and stakeholders have taken to mitigate this problem. We

also investigate the perceived level of success of these initiatives.

1.1 BACKGROUND TO THE STUDY

Public Private Partnerships have the potential to transform Kenya’s achievement of its

development projects towards realization of Vision 2030. PPPs allow the government to tap into

the private sector’s expertise, innovativeness and flexibility towards timely conclusion of project

Kenya has a huge infrastructure deficit and it is important that it’s filled. The demand for the

infrastructure and especially better roads is very high mainly because of economic growth both

in the country and her neighbors in the EAC.According to Henry Rotich, CS Treasury, Kenya’s

annual infrastructure budgetary deficit currently stands at around $2 billion, financial efficiency

and quality assurance.

Kenya Vision 2030 (2008 – 2030) aims to transform Kenya into an industrialized middle income

country by 2030 which requires heavy investments in infrastructure services. The Government

needs to spend USD 60Billion for infrastructure over the next 8 years against available USD 25

Billion (Gap USD 40 Billion). Allocations for year 2015/2016 for infrastructure Ksh 567 Billion

(USD 6.8Billion) less than 9% of GDP and thus it should increase to 15%.

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Lack of adequate infrastructure and public service will result in huge costs to the society from

lower productivity to reduced competitiveness and ultimately loss of business opportunities.

The legal frameworks however pauses a great challenge due to the multiplicity of statutes

incoherently regulating these arrangements. There is a need to review, rationalize and harmonize

these laws in favour of a consolidated and comprehensive statute.

It’s worth noting not all projects are feasible for various reasons such as political, legal and

commercial viability. The private sector may also not take interest in a project due to perceived

high risks or may lack technical, financial or managerial capacity to implement the project.

The government has not clearly defined the contractual obligations to be honoured by investors

involved in PPPs and PPPs law i.e. a clear, transparent, fair and competitive process for Project

identification, selection, prioritization, preparation, appraisal, procurement, approvals and

procurement of project advisors.

1.2 STATEMENT PROBLEM

1.3 OBJECTIVES OF THE STUDY

1.3.1 General Objective

The objective of this study to analyze the challenges affecting the effectiveness of public private

projects in Kenya.

1.3.2 Specific Objectives

(I)To analyze the challenges affecting the effectiveness of public private partnerships

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(ii)To determine factors influencing the performance of Public-Private-Partnerships in the

Transport and infrastructure sector in Kenya.

(iii)To determine the extent to which such factors lead to success of Public-Private Partnerships

In Kenya.

1.3.3 Research Questions

(I)What are the challenges affecting the effectiveness of public private partnership?

(ii)What are factors influencing the effectiveness of public private partnership?

(iii)What is the level of success of the actions?

1.4 JUSTIFICATION OF THE STUDY

1.5 SIGNIFICANCE OF STUDY

PPPs take a variety of forms with varying degrees of public and private sector involvement and

varying levels of public and private sector risk. In fact, risk transfer from the public to the

private sector is a critical element of all PPPs. The goal of PPPs is to combine the best

capabilities of the public and private sectors for mutual benefit.

Kenya is the gateway and business hub in East and Central and thus there is demand for quality

and affordable services from citizens such as transport, water and sewerage, telecommunications,

power, social services. The government is also keen on utilizing efficiencies of private sector in

running public services, expanding the economy and stimulating job creation through PPPs.

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In a PPP arrangement, the government remains actively involved throughout the project’s life

cycle. The private sector is responsible for the more commercial functions such as project

design, construction, finance and operations.

This study is relevant to the Kenyan Government as it highlights the reasons, levels and impact

of challenges affecting the effectiveness of PPPs and consequently to the economy. The Kenya

Government has a large role to play in PPPs and therefore the government cannot contemplate

the investors and stakeholders failure because of such challenges and hindrances.

To avoid the costs and time involved in this expensive process, it’s prudent for the government

to review the impact of this problem in the PPPs as discussed in this research project and come

up with relevant remedies.

This study is also relevant to students who are pursuing a career in the development and public

administration industry. This research project will enlighten them with different issues facing the

development and public service works.

1.6 SCOPE OF STUDY

The study mainly focused on PPP unit at the the National Treasury. Ministry of Devolution and

Transport were also included since they are directly involved in many projects in different

capacities.PPP unit is premised on the fact that it is established as the resource centre for best

practice and guardian of the integrity of the PPP process, playing a large role in identifying

problems, making recommendations to the PPP Committee regarding potential solutions and

ensuring that projects meet such quality criteria as affordability, value for money and appropriate

transfer of risk.

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1.7 ETHICAL CONSIDERATIONS

1.8 LIMITATIONS OF THE STUDY

The limitation part presents what this project does not cover due to lack of time, knowledge and

data. One of the limitations of this project is that the PPP model is created with assumption that

the public sector will join and make supports in finance and policies. There was a lack of

information from the public sector to suggest a PPP model. In the future research it would be

great to get interviews with the public sector to see what they think about PPP and if they are

willing to support the private sector with subsidence and changes in policy. Thus the project only

focuses on arguing why the private sector/investors should join and suffer the losses or

unexpected events in this PPP. It is lack of a complete analysis of why the public sector should

join it as well. Also the author has education in Community Development but not Public

Management, Administration and Policy making. Therefore there is lack of knowledge in Public

Management which could bring a better analysis for this project.

CHAPTER TWO

LITERATURE REVIEW

INTRODUCTION

The main purpose of this section is to determine what has been done already related to the

research problem being studied. A synoptic review of the literature brings out the fore insights in

to the global and local perspective of the challenges facing the effectiveness of public private

partnerships, issues related to local problem statement and theories on statement problem of the

study.

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Global perspective on the challenges facing the effectiveness of public private partnerships

The precise nature of the relationship between the public and private sectors is poorly

understood. In most cases PPPs are understood as a general form of cooperation. Under such a

definition almost all forms of interaction between the public and private sector can be perceived

as a PPP. The use of such general definitions needs to be addressed in order to avoid confusion.

There is generally a lack of understanding on how PPPs are financed. Questions to address

include: Where does the funding come from? How are the investors in a PPP project paid back?

Does the state contribute financially to a PPP?

A lack of clarity as to the precise rationale for PPPs: Why do Governments undertake PPPs? Is it

for financial, social or even environmental reasons or a combination of factors? The rationale for

a government choosing to do PPPs is closely linked to the perceived benefits from PPPs.

How the PPP is created i.e. The mechanics of launching a PPP: Who takes the lead in a PPP?

The public or the private entity? What is the role of the Government vis-à-vis the private sector.

These questions, along with many others regarding the lifecycle of a PPP need to be addressed.

One of the challenges faced by many countries now starting out on PPPs is the lack the expertise

to prepare a PPP business case. This knowledge gap leads to the use of business proposals put

forward by private companies that are ‘unsolicited’ by the public sector and which is not

desirable as a method of (or reason for) launching a PPP.

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A failure to understand the mechanisms for making PPPs more effective leads to the concept of

who assumes the risk in a PPP project along with appropriate risk mitigation must be considered.

There is no science to risk allocation in a PPP and it should be made clear that allocating risk is

in fact the subject of long and protracted negotiations between the parties. This knowledge is

critical because projects often fail because risk sharing is not balanced between the parties.

A lack of knowledge at the project level is an important gap to address because the public sector

may be fearful that the PPP model is just too complicated and as such should not be attempted.

That may be true but examination of the causes of why projects went wrong show that, with

more attention and care, the problems might have been avoided.

Failure to understand the political context of PPPs and the importance of what has been called

‘political will’: Without top level political support from the highest political authorities, PPPs

will not work thus investors need to have confidence that governments are going to stand behind

them even in times of trouble.

PPPs are sometimes perceived as lacking accountability, transparency and as a means of making

profits out of the delivery of essential public services. Adopting a PPP scheme is not easy. The

model is not easy to apply to infrastructure projects due to their complexity, the nature of

contractual arrangements and the high level of uncertainty that arises from the long concession

period.

To ensure the success of a PPP project, both the government and the concessionaire must be

fully competent to implement the partnerships. It is also critical that governments are capable of

adequately defining the most appropriate output specification in a PPP contract, which is the

measurement by which the private sector partner is assessed. Accordingly it is important that the

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performance monitoring mechanisms are properly defined with measurements that can evaluate

whether the private partner has properly complied with the contractual conditions.

Local perspective on the challenges facing the effectiveness of public private partnerships

in Kenya

Partnerships as a mutually supportive relationship can encounter challenges along with successes

as the parties in a partnership pursue their different goals. What may appear straight-forward on

paper can in practice, be more difficult to implement than envisioned thus bringing about a

challenge in the implementation of a given project for which the partnership was formed. The

root of the challenge may be a lack of transparency in partner motivations, expectations, and

benefits, though readiness to collaborate can also significantly impact success.

The lack of well laid legal frameworks paused a great challenge due to the multiplicity of statutes

incoherently regulating these arrangements such as: standards and specifications of the work to be

carried out, investment requirements, employment conditions and workplace restructuring,

disqualification of companies, company responsibility for costs, right to information, Full

disclosure of information and company guarantee (Gray and Larson, 2003)

High levels of corruption and wastage of resources also paused a great challenge in PPPs.This

has led to mismanagement, incompetence and inefficiency thus leading to stalling or failure of

PPP projects.

Lack of trust and harmony of private sector involvement in infrastructure affects the performance

of public private-partnerships. Many individuals in the highest levels of leadership in national

line departments and executive mistrust private sector involvement in infrastructure. Powerful

political constituencies also harbor strong suspicions of Public Private-Partnerships.

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Political leaders and their constituents dislike Public-Private Partnerships because of: mistrust of

private sector intentions, or more specifically, a belief that the private sector will try to take

profit while shirking its responsibilities to provide infrastructure or infrastructure services.

(Graeme and Carsten, 2004).

Large bidding costs of the PPP projects act as a rejecting force for the private parties as they are

unwilling to invest heavily in the bidding process just to be rejected later. What concerns

government, large preparation costs consist of feasibility studies, lawyers and consultation.

Moreover, PPP projects are highly complicated and usually they involve more than two parties’

public, private and banking sectors and all of these parties have their own contradicting aims. In

order to construct a unified agreement, a lot of time and capital needs to be invested on complex

negotiations.

Nevertheless, it should be kept in mind that even though most of the risks are transferred to the

private partner, the final entity that is responsible for providing services to the public is the

government. As a matter of fact, if the private partner goes bankrupt, solely the government has

to deal with the consequences and try to find other expedients how to keep delivering the service

to the public. This implies that even though the risks are contractually transferred to the private

partner, in practice, government retains a large portion of them in case of the private partner’s

failure.

In a PPP agreement the government bounds itself to a single private partner for a long term

period and it agrees today for services/assets that will be in use in further future. There is a

certain amount of risk concerning the future consumers’ need for the specific service. The idea

behind the risks concerned is that the partnership may end up delivering services that are no

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longer required by the public. As a result the partnership will appear to be less valuable than

initially expected.

Other challenges that can be mentioned are: lack of executive and project leadership,

insurmountable communication issues, or deficiencies in planning and defined processes can

create barriers to collaboration.

Issues related to challenges facing the effectiveness of public private partnerships in Kenya

Enabling Environments for Investment and Project Finance

Experience in African projects shows that there still is a huge need for capacity building in

Africa’s public sector. Growth will be sustainable only if both government stability and market

attractiveness i.e. transparency, regulatory and legal framework are ensured. Inadequate

infrastructure is holding back Africa’s economic growth by 2% each year and reducing firms’

productivity by as much as 40%.

Emerging markets in East Africa have a growing demand for infrastructure, and government

financing will not be sufficient to meet the needs, hence the urgency to implement successful

PPPs for improved services in the region.

Setting the framework

Regulation is one of the key enablers for private sector participation. Regulations ensure that the

expectations of the private investor, the government, and the public are equally and sustainably

considered. Institutional and legal frameworks are also paramount to efficient private

participation and are key aspects that the private sector is keen to analyze before partnering with

a public body. A key element for successful PPPs is preparation i.e. only properly prepared

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projects will bring competition. The project cycle should involve an identification process, a

feasibility study, marketing sounding, and a tender process, negotiation of the contract and the

management of the contract. PPPs also need to be affordable/bankable, economic viability and

fair allocation of risks/rewards. In several developed and developing countries, PPP units have

been created to help the government meet these needs. Often located within the Ministry of

Finance, these specialized bodies set strategies on how PPPs should be developed.

Project financing and financial modeling

The source of financing must be clear from the beginning (development finance institutions,

government, commercial or mixed) and risk sharing modeling is an important part of the process.

Project financing is a loan structure that relies primarily on the project's cash flow for repayment,

with the project's assets, rights, and interests held as secondary security or collateral. This means

the value of the asset to be financed is secondary, and that importance relies on the value that the

asset will generate i.e. the cash flows generated by the asset. Hence, decision to finance a project

is based on the analysis of future cash flows deriving from the project’s assets, which often relies

on predictions and assumptions. In project finance the risks depend on factors that would prevent

cash from flowing. If cash flows are too low there is a risk that the project could default,

meaning that the public entity will not generate enough money to pay the loan back.

Due diligence

This is an important process of risk management. Any investor or lender would undertake a due

diligence assessment of a project to investigate the proposed investment in details. Typically, this

implies financial viability (development of a project financial model, analysis of financial

indicators, sensitivity analysis, risk management and mitigation), assessment of the ability of the

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management team and all subcontractors to carry out the project, legal due-diligence, long-term

viability and compliance with relevant laws.

Theoretical Framework

Theory of managing PPP Projects

Researchers have suggested that a successful plan to manage a PPP can only be achieved by

identifying obstacles that may hinder the successful application of a PPP and developing

solutions. Fox and Butler (2004) investigated the obstacles that face partnerships in their

implementation in achieving effective performance of partnerships which included: poor level of

partners’ engagement and representation, competing partners’ ideologies, partners’ conflicts and

poor decision making, lack of clarity on roles, lack of trust and the inability to manage the

‘people issues’ and finally poor performance management. Siemiatycki (2010) agreed that PPPs

are often inflexible arrangements as they involve long-term contracts and in a large number of

cases prolonged conflicts arise between partners which end the partnership before a contract

finishes.

Theory of Institutional Differences between Partnering Organizations

This theory brings to attention the institutional differences between partners with reference to

impact on effective performance and management of PPP projects (Klijn and Teisman, 2000,

Ramiah and Reich, 2006 and Yasin, 2007). One such institutional difference is the phenomenon

of the ‘classical division’ between public and private sectors which has substantial implications

for PPPs in theory and practice (Klijn and Teisman, 2000) as it has been suggested that existing

government organizations are not capable of developing partnership schemes because the public

sector is based on hierarchical demand mechanisms and is unwilling to abandon its formal

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superior position (Teisman and Klijn, 2002, p. 199). This argument is also consistent with

Tierney (2010) having confirmed the presence of partners’ differences in cultural and

geographical settings as well as partners’ miscommunication and misunderstanding. Also Mann,

Pier and Yasin (2007, p.5) argued that the public sector is apprehensive about the private sector’s

fast track and feels misunderstood in terms of its processes. Private sector representatives

complain about government’s slowness in action and bureaucracy. Further it has been noted that

prolonged conflicts and tensions could also arise during the implementation phase due to the

interdependency and competing self-interests of the partners themselves (Siemiatycki, 2010).

Yet, Brinkerhoff and Brinkerhoff (2011) have cautioned that though dominance by the public

sector, partners may undermine expected benefits of partnerships if the public value of PPPs is to

be achieved neither should private interests dominate the joint relationship and achieving the

right balance among heterogeneous partners is challenging.

Principal –Agent Theory

Principal –Agent theory is essential given the specific nature of risks existing in most PPP

projects as most of these risks are uninsurable. Indeed, the probability of risk materialization

directly depends on the PPP partners’ behaviour. Consequently the risk allocation should be

treated within the transaction. The Principal – Agent Theory (PAT) deals the most with the risk

allocation topic. By modeling the relation between an informed party (Principal) and an

uninformed one (Agent), the PAT highlights two problems arising from the information

asymmetry: adverse selection and moral hazard. Both of them lead to higher risk in the

realization of the project outcome. The question is how to allocate efficiently these risks between

partners in the reference complete contract. The target followed in the determination of risk

allocation criteria is the total cost minimization. This must maximize the Principal’s utility. The

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analytical process followed by the PAT consists in maximizing the Principal’s utility subject to

the Agent’s participation and incentive constraints. The respect of these two constraints must

permit both partners to improve their situation, compared to a situation in which only one

constraint would have been taken into account. As Laffont & Martimort [2002] point out,

“incentive and participation constraints define the set of incentive feasible allocations” (p.30).

Both risk allocation criteria denounced by the PAT come from these two constraints.

In the PAT framework, the Agent’s effort is not observable. At the same time the Agent’s

behaviour is at the root of the performance. In order to assure a certain level of performance the

Principal should give the Agent incentives to perform. The incentive constraint should be

tackled. The authors belonging to the PAT concentrate on the imposing of potential cost

overruns on partners as an incentive device. The payment the Agent receives from the Principal

depends on his performance. In the Principal-Agent literature, the Agent is most of time

supposed to be risk averse whereas the principal is supposed to be risk neutral. Thirdly, the

Principal should support risk in order to minimize the overall risk-bearing cost.

CHAPTER THREE: RESEARCH METHODOLOGY

OVERVIEW

This chapter presents the research design, sampling methods and technique to be used in data

collection and analysis. It also presents the methodology that will be used to carry out the study.

These include the study design, target population, data collection tools to be used and data

collection techniques, data analysis method and presentation. This research methodology is

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aimed at enabling the researcher to obtain and process data on the analysis of challenges

affecting the effectiveness of public private partnership.

RESEARCH DESIGN

In this research study, a descriptive research design will be used in data collection analysis.

Kohari, 2004, defines descriptive research as those studies concerned with specific preconditions

with narrations of facts and characteristics concerning individuals, groups and situations. The

research will obtain data on existing phenomena. The researcher has no control over the

variables but can only report what is happening (Kohari, 2004).

Descriptive research designs help provide answers to the questions of who, what, when, where

and how associated with a particular research problem. Descriptive research is used to obtain

information concerning the current status of the phenomena and to describe “what exists” with

respect to variables or conditions in a situation (Kirshenblatt-Gimblett, 2006).

The advantage of using the descriptive research design is that this approach enables the

researcher to collect a large amount of data for detailed analysis as compared to other designs. It

also yields rich data that leads to important recommendations. It’s also advantageous where if the

limitations are properly understood, they can be a useful tool in developing a more focused study

(Kirshenblatt-Gimblett, 2006).

STUDY POPULATION

A random survey of Public-Private Partnership Unit at Treasury, Ministry of Devolution and

Planning and Ministry of Transport and Infrastructure will be selected. The respondents will

purposively be selected middle level officials in the state departments.

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The respondents will be informed about the intended study through phone calls, emails as well as

personal visits for the state departments are within the proximity of our research station. The

researcher will rely on referral from personal acquaintances in the state agencies to get to the

relevant senior officials.

Population Category Frequency (Population)

Government Ministries 3

Agencies,Parastatals and Organizations 52

Total 55

SAMPLING TECHNIQUES AND SAMPLE SIZE

The sample size for this research will constitute 50% of the total number of respondents. A

stratified random sampling will be used. According to Mugenda and Mugenda (2003), stratified

random sampling achieves desired representation from various subgroups in the population. In

this case, a sample size of 50% is perceived to be a good representation of the total population.

In this case, a sample sub group will consist of officials and management teams from the state

departments of Ministry of Transport, Ministry of Devolution and Planning and PPP Unit at the

National Treasury.

Sample Design

Population Category Population Sample Inclusion Sample Size

Government

Ministries

3 100% 3

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Agencies,Parastatals

and Organizations

30 50% 15

Total 33 18

DATA COLLECTION PROCEDURES

Data collection is the process of gathering and measuring of information on variables of interest,

in an interested systematic fashion that enables one to answer stated research questions, test

hypotheses and evaluate outcomes. (Leedy and Ormrod, 2001)

There are two types of data collection that will be used to collect data in this research paper:

Interviews and use of questionnaires. In qualitative research we exploit the relationship between

us and our respondents while in quantitative they ignore the feeling of these studies. Quantitative

researchers feel that it’s unethical because the point of view of the respondents is ignored,

whereas the findings, interpretations and conclusions are all drawn from the point of view of the

researcher.

Primary Data

Primary data will be collected using the questionnaires and interviews. The questionnaires will

contain both structured and unstructured questions. The respondents will be expected to provide

vital information on the challenges affecting the effectiveness of the PPPs in Kenya.

The advantage of using questionnaires is that people are more truthful while responding to the

questionnaires regarding controversial issues in particular due to the fact that their responses are

anonymous. But they also have drawbacks. Majority of the people who receive questionnaires

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don’t return them and those who do not might not be representative of the originally selected

sample. (Leedy and Ormrod, 2001)

Questionnaires will be pre-tested with a group of academicians and practitioners. Completed

questionnaires will be collected directly by the researcher and his research assistant. This will

enable the researcher and his research assistant to clarify any issues that would not be clear to the

respondents.

Oral interviews and telephone calls will be equally utilized. Interviews have a distinct advantage

of enabling the researcher to establish rapport with potential participants and therefore gain their

cooperation. These interviews yield highest response rates in survey research. They also allow

the researcher to clarify ambiguous answers and when appropriate, seek follow-up information.

Disadvantages include impractical when large samples are involved time consuming and

expensive (Leedy and Ormrod, 2001)

Secondary data

Secondary data will be obtained electric journals, books, newspapers, Government documents

and other relevant publications available at the PPP unit at the National Treasury.

DATA PRESENTATION AND ANALYSIS

The collected data will be analyzed using a combination of analytical and descriptive techniques.

Data from questionnaires and interviews will be studied and comparison made using MS Excel

and the SPSS software package (Statistical Package for Social Sciences).These include

frequencies, total scores, means and percentages. Spreadsheets will be used in order to come up

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with appropriate charts and tables for data presentation while total scores were used to rank the

responses.

Qualitative analysis of data refers to the non-empirical analysis, the researcher will analysis the

qualitative data by establishing patterns, trends and relationships at the various stages of the

study.

VALIDITY AND RELIABILTY

Reliability is defined as: ‘The degree to which a measure of a concept is stable’ (Bryman and

Bell, 2001, page 718). It is about the stable of data which the researcher collects. Under primary

data collecting, it should be ensured that result of the survey can be used for other study later on.

It is also about the quality of data which the researcher uses to create knowledge. It is mentioned

earlier under the secondary data collecting that the researcher has to control the quality of the

data he collects.

Validity is ‘a concern with the integrity of the conclusions that are generated from a piece of

research’ (Bryman and Bell, 2001, p. 720). The researcher needs to make sure that the results

carries integrity and that the measures of a concept really reflect the concept it is supposed to

(Bryman and Bell, 2011, p. 42). Validity is very important in an academic research, especially in

projects that apply the objectivist approach because it approves that the data is trustable, testable

and can be referred to in future researches.

In this project, the reliability and validity are considered as important elements. Literature

reviews are made using high quality papers from trustable sources linked to Daystar University

Library (DUB). Books used in this project are also trustable because they are in the DUB. Some

internet sources will be used which are checked as trustable sites. There will be always time view

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written down for each of the webpage used. It will be ensured that interviewee has good enough

knowledge about the area where the researcher wants to investigate.

RESEARCH QUESTIONNAIRE

PUBLIC-PRIVATE-PARTNERSHIPS

Kindly answer the following questionnaire by ticking in the appropriate box. For likert type of

questions Use a scale of 1-5 where 1= No Extent, 2= Little Extent, 3= Moderate Extent, 4=Great

Extent and 5=Very Great Extent.

PART A: DEMOGRAPHIC INFORMATION

1. Name of the organization (optional)……………………………………………

2. Number of years the organization has been in operation

1-6 years ( ) 7-12 years ( )

13-18 years ( ) above 19 years ( )

3. Which sector do your organization belong to?

Private sector ( )

Public sector ( )

4. Category of the organization

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Infrastructure Development Agency ( )

Government Ministry ( )

PART B: MAIN ISSUES

5. Are you aware of the Public-Private-Partnerships in the Infrastructure sector in Kenya?

Yes ( ) No ( )

6. Are you a partner in the Public-Private-Partnerships?

Yes ( ) No ( )

7. Has Public-Private-Partnerships in the Infrastructure sector in Kenya succeeded in promoting

Regional development?

Yes ( ) No ( )

8. How effective is the operation of Public-Private-Partnerships?

Very effective ( )

Effective ( )

Ineffective ( )

9. To what extent has Public-Private-Partnerships enhanced performance of your

Organization/Agency?

Very Great Extent ( )

Great Extent ( )

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Moderate Extent ( )

Little Extent ( )

No extent ( )

10. In your opinion, what is your take on Public-Private-Partnership and how is it important for

accomplishment of Kenya Vision 2030 in socio economic transformation?

………………………………………………………………………………………………………

……………………………………………………………………………………………………..

……………………………………………………………………………………………………..

11. Does institutional/legal framework affect the performance of Public Private Partnerships?

Yes ( ) No ( )

12. Indicate the extent to which the aspects of Institutional/Legal Framework affect the success

and performance of Public-Private-Partnerships

1 2 3 4 5

Favorable legal framework

Strong Institutional Framework

13. Has political and socio-economic environment affected the performance of Public-Private-

Partnerships?

Yes ( ) No ( )

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14. If yes above, rate the extent to aspects political and socio-economic environment have

affected the success of Public-Private-Partnerships?

1 2 3 4 5

Stable political system

Favorable economic conditions

15. Does risk management affect the performance of Public-Private-Partnerships?

Yes ( ) No ( )

16. To what extent do the aspects of risk management affect the success and performance of

Public Private Partnerships?

1 2 3 4 5

Appropriate risk allocation

Type of agreements in the contract

Guarantees from the governments

17. Does economic viability affect the performance of Public-Private-Partnerships?

Yes ( ) No ( )

18. If yes above, to what extent do aspects of economic viability affected the success of Public-

Private-Partnerships

1 2 3 4 5

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Financial capability

Sufficient profitability of the project on return

investments

Long-term demand for the service offered by the

project

19. Does trust affect the performance of Public-Private-Partnerships?

Yes ( ) No ( )

20. If yes, indicate the extent to which the aspects of trust have affected the performance of

effective Public-Private-Partnerships?

1 2 3 4 5

Project management style

Strong commitment

Strategic behavior

21. What is your level of agreement with statements about Public-Private Partnerships?

1 2 3 4 5

Public-Private-Partnerships provides opportunities for

development corporations to harness private enterprise

as a means towards economic and social development

of their host countries

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Public-Private-Partnerships ideally integrates the

public sector, the private sectors and all community

stakeholders in the provision of goods and services to

the citizens in an economy in a way that they all

benefit by pooling their resources and sharing

responsibilities

Public-Private-Partnerships involve design,

construction, financing, operation and maintenance of

public infrastructure and facilities, or the operation of

services, to meet public needs

Public-Private Partnerships are a means of public

sector procurement using private sector finance and

best practice

22. What needs to be done in order to ensure effective performance of Public-Private

Partnerships?

………………………………………………………………………………………………………

………………………………………………………………………………………………………

………………………………………………………………………………………………………

23. Rate your level of agreement/disagreement with the challenges of Public-Private Partnerships

effective performance.

Use a scale of 1-5 where 1= No Extent, 2= Little Extent, 3= Moderate

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Extent, 4=Great Extent and 5=Very Great Extent.

1 2 3 4 5

Lack of transparency in partner motivations,

expectations, and benefits though readiness to

collaborate

Lack of highest level policy direction

Mistrust of private sector involvement in infrastructure

Fear of losing control of infrastructure assets, authority,

or responsibilities

Detailed planning and outside scrutiny that Public-

private partnerships require

24. List other challenges that you have faced as a partner/stakeholder in the Public-Private

Partnerships

………………………………………………………………………………………………………

………………………………………………………………………………………………………

………………………………………………………………………………………………………

25. What would you recommend that should be done in order to counter the challenges facing

effectiveness of performance of the Public-Private-Partnerships?

……………………………………………………………………………………………………..

………………………………………………………………………………………………………

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……………………………………………………………………………………………………...

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