Kenya is set to receive a financial boost to fund road projects after Treasury Cabinet Secretary John Mbadi confirmed the acquisition of a Ksh77 billion (USD600 million) loan.
The financing is backed by the country's road maintenance levy, which is collected from motorists at fuel pumps across the country.
Amid the government's struggles with a tight budget and rising debt payments, Mbadi revealed the move to securitise the road maintenance levy to enable the Kenya Roads Board to access cheaper credit. The road maintenance levy is currently set at Ksh18 (USD0.139) per litre of fuel.
Confirming the loan, Mbadi noted that the money will go directly to the Kenya Roads Board, which typically oversees road maintenance on behalf of the government.
Among other things, the loan will mainly be used to pay contractors for urgent road works as the government turns to China to secure more funds for road expansion.
The Ksh78 million is one piece of a bigger puzzle for the government as far as funding is concerned. The government is still pursuing a bigger loan, which can either come in the form of a privately placed bond or a syndicated loan.
Mbadi, while appearing before the National Assembly on Wednesday, April 16, also confirmed the government had secured the Ksh78 billion facility from the World Bank, set to be disbursed in June 2025.
"Doors are opening for external resources. The World Bank disbursement is coming in June," the CS affirmed, saying that the delays were largely because of the Conflict of Interest Bill, which was pending.
Another loan of Ksh34.3 billion (USD265 million) will be unlocked in a week's time, according to Mbadi.
Kenya has been heavily reliant on loans to fund its infrastructure projects, with the latest one coming months after President William Ruto secured a Ksh40 billion loan facility to restart 15 stalled road projects in over 10 counties.
Following recent meetings between Mbadi and Chinese Ambassador to Kenya Guo Haiyan—along with the CS's subsequent trip to China—it has also emerged that the government will proceed with the stalled extension of the Standard Gauge Railway (SGR), with funding secured from the Asian country.
This follows engagements that began in January where a consortium of Chinese companies will provide 40 per cent of the funding for the 475km (295-mile) railway line from Naivasha to the border town of Malaba.
