President William Ruto’s administration is on the verge of securing a Ksh72 billion loan from China for the construction of major roads, including a 124-kilometre highway connecting Kenya and Tanzania.
Treasury Cabinet Secretary John Mbadi, who spoke on Wednesday, May 14, said the highway was initially planned to be constructed with funding from the World Bank.
However, due to unprecedented delays by the lender in disbursing the funds, the road could potentially be constructed using the credit facility from China.
Speaking during an interview with Ramogi FM, Mbadi said the agreement for the construction of the Ksh124km road using the Chinese loan was reached after deliberations with Transport CS Davis Chirchir.
According to the Treasury CS, part of the loan would also be used to construct other key roads within the country, including two major highways that connect counties within the Rift Valley region and the greater Lake Victoria basin.
“Recently, the Transport CS revealed plans to construct two roads that would be funded by the World Bank. One is from the South Rift and connects Awendo, and the other one is from the North Rift,” Mbadi said.
He went on: “So these roads were meant to be funded by the World Bank, but yesterday we told China about our plan to construct additional roads. We sought Ksh72 billion from China for the roads.”
During the interview, Mbadi clarified that the two loans from the World Bank and China would be concessional. A concessional loan is a credit made on more favourable terms than the borrower could obtain in the market.
"The loans that I am talking about will be concessional. The World Bank sometimes gives us a loan that is even at 1 per cent. The Chinese are willing to give us the loan at an interest rate below 4 per cent. So we will negotiate with them," Mbadi explained.
Kenya has been struggling to fund most development projects, including road construction, due to slow revenue growth, high debt repayment and increased expenditure demands.
Ruto's administration, which came into power in 2022, has been trying to secure funds to complete some of the roads whose construction commenced during the previous regime.
Nonetheless, the latest development comes a month after the government, through the Kenya National Highways Authority (KeNHA) cancelled a Ksh190 billion project for the dualling of the Nairobi-Nakuru highway.
The road construction tender was later awarded to Chinese firms which would be commencing the dualling of the road mid this year with the first phase of the construction set to be completed in 2027.
