NAIROBI, Kenya — President William Ruto has signed into law legislation establishing the Railway Development Levy Fund, a financing mechanism expected to channel billions of shillings toward railway infrastructure projects across the country.
The fund will be created following the enactment of the Miscellaneous Fees and Levies (Amendment) Act, 2026, which expands the scope of the Railway Development Levy (RDL) beyond financing the construction and operation of the Standard Gauge Railway.
Under the new law signed on Friday at the State House, the government will channel more than Sh35 billion already collected through the levy directly into the newly established fund.
Officials say the framework will allow the state to mobilise additional capital by securitising future collections from the levy.
According to provisions in the law, up to 90 per cent of the fund may be used as security to raise additional financing for railway infrastructure projects, including expansion and maintenance of existing rail systems.
The government said the amendments are intended to strengthen the institutional framework governing the management and use of the levy while supporting long-term infrastructure development.
“The amended law supports the government’s policy objective of mobilising sustainable financing for strategic railway transport infrastructure while strengthening the institutional framework for the management and utilisation of the Railway Development Levy,” a statement from State House said.
The statement added that the creation of the fund is meant to ensure resources collected through the levy are properly managed and dedicated specifically to railway infrastructure development.
Beyond financing new projects, the law also allows funds to be used for safety improvements, economic regulation of railway infrastructure, and rehabilitation of existing rail systems.
However, the rehabilitation of railway transport infrastructure will require joint approval from the Cabinet Secretary for the National Treasury and the Cabinet Secretary responsible for transport.
The move comes as the government intensifies efforts to secure alternative financing channels for large-scale infrastructure projects amid fiscal constraints.
Earlier this year, the government announced plans to securitise Sh125 billion in short-term syndicated loans to finance ongoing road construction projects.
According to reporting by Bloomberg, the government plans to borrow Sh60 billion in the first half of 2026, with the remaining funds expected during the 2026/27 financial year starting in July.
Through the Railway Development Levy Fund, the government is also planning to list a Sh175 billion road bond on the Nairobi Securities Exchange (NSE) to refinance earlier bridge loans taken to support infrastructure development.
