Project Finance Structuring, Public Sector Participation, and Institutional Capacity on Sustainability of Special Economic Zone Projects in Kenya

Special Economic Zones (SEZs) have been widely promoted as instruments for industrialization, export growth, and employment creation, yet their long-term sustainability remains uneven, particularly in emerging economies. This study investigates the joint influence of Project Finance Structuring, Public Sector Participation, and Institutional Capacity on the sustainability of SEZ projects in Kenya. A cross-sectional research design was employed, collecting primary data from 61 SEZ projects through structured questionnaires administered to project managers, government officials, and community leaders. Reliability and validity of the instruments were confirmed through Cronbach’s alpha and factor analysis, while diagnostic tests ensured adherence to regression assumptions. Data were analyzed using descriptive statistics, Pearson correlation, and multiple linear regression to assess the strength, direction, and significance of relationships among the variables. The findings reveal that Public Sector Participation is the strongest predictor of SEZ sustainability, followed by Institutional Capacity, while Project Finance Structuring exhibits a moderate correlation but is not a statistically significant determinant when controlling for institutional and government factors. The three combines variables explain over 76 percent of the variation in sustainability of SEZ projects. The study concludes that effective public sector support and strong institutional capacity are critical for promoting sustainability of SEZ projects in Kenya.