Nairobi — In a bid to tackle mounting infrastructure debt without asking more of taxpayers, Kenya has launched a new way to fund its roads one that doesn’t depend on borrowing or new taxes.
Cabinet Secretary for Roads and Transport, Davis Chirchir, on Tuesday announced a plan that will unlock KSh 175 billion to pay off contractors and revive hundreds of stalled road projects. The money comes not from loans or the Exchequer, but from a new twist on existing fuel levy collections.
“It’s a win for the country,” Mr Chirchir said at a press briefing in Nairobi. “We’re using future revenues money that’s already coming in through the fuel levy and turning it into immediate cash without borrowing.”
The scheme works by securitising a portion of the Road Maintenance Levy Fund. Of every KSh 25 collected, KSh 7 is now channelled through a Special Purpose Vehicle (SPV), allowing the Kenya Roads Board (KRB) to raise funds upfront.
According to Mr Chirchir, this method will enable the government to clear more than KSh 100 billion in verified arrears to road contractors. More than 580 road projects some long-forgotten are set to resume.
A Shift from Borrowing
Kenya has long leaned on loans and annual budget allocations to fund its roads. That approach, many agree, has run its course.
“We’ve simply hit a wall with external borrowing,” said a senior official at the Treasury, speaking on background. “This approach keeps us moving without adding to our debt pile.”
Kenya’s public debt stood at around KSh 10.6 trillion at the start of 2025, according to the Parliamentary Budget Office. With pressure mounting from international lenders and the IMF to rein in deficits, the government has had to find alternative routes.
Independent analysts have cautiously welcomed the move.
“This is a smart use of recurring revenue,” said economist Carol Nderitu of the Institute of Public Finance. “It helps avoid the debt trap, though the government must ensure transparency and accountability in how the funds are used.”
No New Taxes, No Public Pain
Perhaps most critically, officials are clear that the model brings no new burden to the public.
“There are no new levies, no added taxes,” Mr Chirchir stressed. “We’re simply working smarter with what we already collect.”
The model is also not expected to affect Kenya’s debt indicators, as the securitised funds are not classified as public debt. Investors, so far, appear confident. According to Chirchir, the instrument has been rated low-risk, given the predictability of the fuel levy.
A Sign of Things to Come?
The Roads Board is now eyeing the model as a blueprint for future infrastructure financing. If successful, it could be expanded to other sectors.
For now, however, officials are focused on clearing the long list of unpaid contractors and stalled projects. Roads in places like Turkana, Kitui, and Vihiga, where works ground to a halt months ago, could soon see new life.
“This isn’t just about tarmac,” said Mr Chirchir. “It’s about jobs, movement, and trust in government delivery.”
As Kenya walks a fiscal tightrope, this new path offers some relief. But as always, the proof will lie in delivery and whether those 580 roads really get finished.
