NAIROBI, Kenya — Kenya has launched a new infrastructure financing model aimed at clearing billions in pending road contractor arrears while avoiding additional pressure on taxpayers or the national budget.
Through the Kenya Roads Board (KRB), the government has raised KSh175 billion using a securitization plan tied to the Road Maintenance Levy Fund (RMLF).
The arrangement, which channels a portion of future fuel levy collections into a Special Purpose Vehicle (SPV), will fund the clearance of verified arrears and restart more than 580 stalled road projects nationwide.
This model marks a significant departure from Kenya’s traditional infrastructure funding strategies, which have typically relied on exchequer allocations and borrowing—both of which have strained public finances and increased sovereign debt.
By securitizing KSh7 of every KSh25 collected from the RMLF, the KRB has secured upfront liquidity without tapping into the 2025/26 budget or imposing new taxes.
The approach is expected to ease fiscal pressure during a year in which the Treasury faces tightening budget constraints and the need to stay within debt sustainability limits.
The securitized funds will cover a substantial portion of pending bills in the road sector, which had accumulated to over KSh175 billion by early 2024.
Many contractors had suspended work due to delayed payments, leading to stalled projects and economic slowdowns in affected areas.
In addition to accelerating payments and restoring contractor confidence, the new financing approach is projected to stimulate economic activity in sectors reliant on road transport, such as agriculture, logistics, and trade.
Crucially, the model operates off the government’s balance sheet, meaning it does not increase official debt levels.
Since repayments are drawn from existing and predictable revenue streams—specifically, fuel levies—it is considered relatively low-risk for investors and avoids the volatility of externally sourced credit.
With the burden of legacy road arrears shifted away from the exchequer, budget planners now have room to redirect over KSh100 billion in the 2025/26 financial year to other priority sectors, including healthcare, education, and public debt servicing.
The securitization plan is being viewed as a potential template for addressing fiscal challenges in other capital-intensive sectors.
