Kenya has become the first country in the region to use a financial model known as securitization to fund critical road infrastructure without adding to the public debt burden.
The Kenya Roads Board (KRB), tasked with managing road maintenance funding, has adopted the model to raise KSh175 billion urgently needed to pay contractors and revive over 580 stalled road projects across the country.
The move involves leveraging a portion of the Road Maintenance Levy Fund (RMLF)—specifically KSh7 of the KSh25 collected from every litre of fuel sold—over the next decade.
Transport Cabinet Secretary Davis Chirchir said the revenue stream has been transferred to a Special Purpose Vehicle (SPV), which has already secured the entire KSh175 billion upfront from private investors.
These investors will be repaid directly from the fuel levy, bypassing the national budget.
“This is not a new tax, nor is it a loan. It is a smarter, more sustainable use of funds we already collect,” Chirchir said on Friday.
The model allows immediate clearance of outstanding arrears to contractors, and is expected to jumpstart road works, create jobs, and spur economic activity in the construction sector.
Crucially, the approach shifts financial risk to the private investors and protects consumers from fuel price hikes linked to debt repayment.
Chirchir said the success of this approach could serve as a blueprint for other government agencies with stable revenue streams, including the Kenya Airports Authority, the Kenya Ports Authority, and KenGen.
