Kenya has seen successful PPP projects like the Port of Mombasa Grain Terminal, Malindi Water Utility, Jomo Kenyatta International Airport Cargo Terminal, and the Kenya-Uganda Railway Concession. While these successes are commendable, it's crucial to address any potential weaknesses to ensure future PPP projects are beneficial for all parties involved. 

The Adani Group's involvement in PPP projects in Kenya has generated significant curiosity and concern, raising questions about their identity, past performance, and the interests they represent. These concerns extend beyond just the Adani Group and will likely apply to other private partners considering PPP projects in Kenya. The Adani Group's alleged track record and potential underperformance underscore the critical need for thorough due diligence in evaluating any prospective project partner. 

The ongoing questions point to the need for parties in any PPP to conduct comprehensive due diligence on each other. Further, our government must make this information available to the public in the spirit of transparency and accountability. Key aspects to focus on in this process include: 

Legal Due Diligence starts with an examination of the partner’s corporate structure, including ownership, subsidiaries, and affiliated entities. It is crucial to verify the legitimacy of the company through official documents such as registration certificates, memoranda, articles of association, and government registry searches. Additionally, reviewing any past or ongoing legal disputes, and assessing the partner’s compliance with local and international laws, helps identify potential risks. Understanding the partner’s existing contractual obligations is also essential to gauge their capacity to meet additional commitments under the PPP agreement. 

Financial Due Diligence is equally important. Reviewing the partner’s audited financial statements over the past three to six years provides insight into their financial stability. This includes analyzing profitability, liquidity, solvency, and cash flow stability. Experts in financial analysis are essential to interpret this data and provide actionable insights. Evaluating the partner’s credit history and current debt levels is also crucial, as it reflects their ability to secure financing and manage debt effectively. Given Kenya’s stance against illicit finances, coupled with the grey listing, it is imperative to exercise heightened scrutiny and ensure strict adherence to due diligence in selecting partners. The scrutiny of the partner’s funding, ensures they are legitimate and sufficient to prevent project delays. Analyzing the partner’s history of investments in similar projects, particularly their ability to meet financial commitments and achieve a return on investment, is another vital step. 

Technical Expertise and Capacity are also key factors. The partner’s experience and expertise in similar projects, especially in the relevant sector, must be assessed. Reviewing past project performance, including adherence to timelines, budgets, and the quality of work, provides a clear picture of their capabilities. Additionally, evaluating whether the partner has the necessary workforce, technology, equipment, and other resources to execute the project successfully is crucial. Their ability to innovate and apply advanced technologies can further enhance the project’s potential for success. It's important to recognize that PPPs offer a valuable opportunity for knowledge transfer to the local workforce involved in the project's implementation. Therefore, the capacity and expertise of the partner are crucial. 

The partner’s Reputation and Market Standing also need close examination. Scrutinizing their reputation within the industry, including feedback from previous clients, partners, and stakeholders, provides valuable insights. Their market position, competitive advantages, and influence are critical factors to consider. Additionally, examining their Corporate Social Responsibility (CSR) practices and their alignment with the project’s values, particularly in areas involving community engagement or environmental sustainability, is important. 

Management and Governance practices offer further insights into the partner’s suitability. Assessing the qualifications, experience, and stability of the partner’s leadership team, and understanding their decision-making processes and governance structure, helps gauge their reliability. It is also important to ensure that their governance practices adhere to transparency, accountability, and ethical standards, aligning with the host partner’s expectations. 

Given the complexities inherent in PPP projects, Risk Management and Contingency Planning are essential. Evaluating the partner’s risk management framework, including their approach to identifying, assessing, and mitigating risks, ensures they are prepared for potential challenges. Robust contingency plans should be in place to address risks such as financial shortfalls, cost overruns, disputes, delays, or technical challenges. 

Cultural and Strategic Alignment is another often overlooked aspect of due diligence. It’s vital to ensure that the partner’s strategic goals align with the project’s objectives, especially given the long-term nature of many PPP projects. Assessing values, communication styles, and collaborative approaches helps ensure a good cultural fit between the partners. 

Environmental, Social, and Governance (ESG) factors also play a crucial role in due diligence. Reviewing the partner’s environmental policies and practices, especially if the project involves significant environmental impact, is important. Their approach to social responsibility, community engagement, and management of social impacts related to the project should also be carefully evaluated. High governance standards in transparency, ethical conduct, and anti-corruption measures are non-negotiable. 

Finally, understanding the partner’s Exit Strategy and Dispute Resolution mechanisms is essential. It’s important to know the conditions under which the partner might withdraw from the project and the potential impact this could have. Reviewing their approach to resolving disputes, including their willingness to engage in arbitration, mediation, or other dispute resolution mechanisms, ensures there is a clear path forward if conflicts arise. 

Conducting thorough due diligence on a PPP project partner is essential to ensure they are financially sound, legally compliant, technically capable, and strategically aligned with the project’s goals. This process significantly reduces the risk of partnership failure and enhances the likelihood of project success.