Kenya has secured a significant financial boost for its road infrastructure projects, obtaining $600 million (approximately Ksh.77.7 billion) in short-term financing from commercial banks. The funding, announced by Finance Minister John Mbadi on Wednesday, is backed by the country’s fuel levy collections and is expected to provide immediate support for ongoing and stalled road construction projects across the country.
This development comes at a critical time for the East African nation, which is grappling with budgetary constraints arising from high public debt repayments, slow tax revenue growth, and increased expenditure demands, especially from its 47 devolved county governments.
The funds were raised through the securitisation of the Road Maintenance Levy Fund, which collects Ksh.18 per litre of fuel purchased by motorists. By using these predictable levy collections as collateral, the Kenya Roads Board (KRB) was able to access cheaper bank financing, making the deal more attractive to lenders and sustainable for the government.
“The financing of about $600 million will go directly to the Kenya Roads Board for use in urgent road maintenance and to clear pending payments to contractors,” said Finance Minister Mbadi in an interview with Reuters.
The government, under President William Ruto, who assumed office in September 2022, has prioritized infrastructure development as a cornerstone of economic growth. The administration is actively exploring additional funding options, including a larger deal valued at up to $1.5 billion through either a privately placed bond or a syndicated loan.
Meanwhile, the government has also reached out to China for financial support to expand a key highway project, underlining Kenya’s ongoing reliance on international funding to complete critical infrastructure initiatives.
The injection of funds is expected to accelerate the completion of delayed projects and improve the overall quality and connectivity of roads across the country. As infrastructure remains pivotal to Kenya’s economic transformation, the successful implementation of this financing strategy could serve as a model for future public-private partnerships in the country.
