KENYA has secured $600 million in short-term financing from commercial banks to fund road construction projects, the country’s finance minister announced on Wednesday. The loan is backed by collections from a national fuel levy, allowing the government to press ahead with urgent infrastructure works amid budgetary shortfalls.
The funding arrangement leverages the country’s road maintenance levy, currently set at KSh18 ($0.1392) per litre of fuel, which has been securitised to help the Kenya Roads Board access bank credit at reduced rates.
‘They have received a funding of about $600 million,’ Finance Minister John Mbadi told Reuters, confirming the transaction’s structure and purpose.
Budget strains drive new financing model
President William Ruto’s administration, which assumed office in September 2022, has struggled to maintain momentum on development projects amid sluggish tax revenue, soaring debt repayments, and increased fiscal demands from the country’s 47 devolved counties.
In response, the government has looked for innovative financing solutions to complete stalled infrastructure initiatives. The newly secured funds will go directly to the Kenya Roads Board, enabling it to clear outstanding payments to road contractors and resume critical works.
Government eyes larger funding deal
While this $600 million injection offers short-term relief, Kenya is still pursuing a larger financial package. According to Mbadi, options under consideration include a privately placed bond or a syndicated loan, potentially totalling up to $1.5bn.
Such a transaction would help ease mounting pressure on the treasury, especially as major infrastructure works like highway expansions demand sustained investment.
China still in the picture
Alongside commercial bank deals, President Ruto’s government has also re-engaged with Chinese partners to secure additional funding for large-scale transport projects. China has historically played a central role in Kenya’s infrastructure drive, especially in rail and highway sectors.
This multifaceted approach, combining domestic revenue securitisation, external credit, and foreign partnerships, underscores the administration’s urgency in maintaining progress on road connectivity and national development goals.
