CS Chirchir: New road funding model to ease budget pressure, spare taxpayers

In a landmark move poised to transform Kenya’s infrastructure financing landscape, the government has unveiled a new strategy for road funding that will ease pressure on the 2025/26 budget while shielding taxpayers from new levies.

The Kenya Roads Board (KRB), under the Ministry of Roads and Transport, has adopted an innovative financial model by securitizing a portion of the Road Maintenance Levy Fund (RMLF). Specifically, KSh 7 out of every KSh 25 collected from the RMLF has been directed through a Special Purpose Vehicle (SPV), unlocking an upfront KSh 175 billion.

This strategic financial injection will be utilized to settle a backlog of verified contractor arrears and revive over 580 stalled road projects across the country.

Speaking on the initiative, Cabinet Secretary for Roads and Transport Davis Chirchir stated that the securitization model represents a turning point in Kenya’s efforts to deliver critical infrastructure without further burdening taxpayers or inflating the national debt.

“By using future cash flows rather than borrowing or tapping into the annual Exchequer, this securitization effort lifts a substantial weight off the national budget. With Treasury facing mounting pressure to reduce fiscal deficits, KRB’s off-balance-sheet model provides immediate liquidity without contributing to Kenya’s sovereign debt,” Chirchir announced.

The CS explained that the government has traditionally depended on annual budget allocations and external borrowing to fund road construction and maintenance—approaches that “have proven unsustainable given the scale of Kenya’s infrastructure backlog and the country’s limited fiscal space.”

Without this securitization, Chirchir indicated that the National Treasury would have been required to allocate over KSh 100 billion to settle pending road construction bills. Now, that allocation can be redirected to critical sectors, including healthcare, education, and debt servicing, supporting the country’s efforts to manage fiscal deficits.

This financing method does not impact Kenya’s debt sustainability indicators, as it leverages predictable fuel levy collections and avoids sovereign borrowing, he said. The model is deemed “low-risk by investors” and “does not appear in public debt statistics.”

Importantly, Chirchir emphasized that no new taxes or levies will be introduced. He confirmed that funds are sourced from existing revenue streams within the RMLF, ensuring that the public does not endure any additional financial strain.

“As construction resumes and pending bills are cleared, the impact will be felt not just in infrastructure, but in renewed economic momentum and trust in government planning,” he said.

With the model now in place, KRB is expected to spearhead the rollout of similar financing solutions for future infrastructure development, signalling a shift towards sustainable public investment.