Government clears Sh123 billion road arrears, reviving 875 stalled projects
The Cabinet noted that these payments have accelerated the pace of ongoing projects since April 2025, giving a significant boost to construction activity across the nation.
All pending road sector payments up to December 2024 have been cleared with Sh123 billion disbursed.
As announced on Monday, this has allowed contractors to resume 875 previously stalled projects and restored confidence in the sector.
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The Cabinet noted that these payments have accelerated the pace of ongoing projects since April 2025, giving a significant boost to construction activity across the nation.
The planned Sh175 billion bond will be supported by the Kenya Roads Board’s Road Maintenance Levy Fund, which is financed through the fuel levy.
This ensures repayments are linked to a predictable and stable revenue source.
The National Treasury also explained that a Sh104 billion loan obtained from a syndicate of commercial banks was used to settle verified pending bills, allowing contractors to resume work on projects that had been delayed due to lack of funds.
The disbursement of these payments has breathed new life into the building and construction sector, which had experienced a technical recession after two consecutive quarters of contraction up to September 2024.
With contractors back on site and projects resuming, the sector is witnessing renewed momentum, signaling progress for national infrastructure and supporting broader economic recovery.
Earlier, in November, the government had cleared Sh93 billion in pending road bills using commercial bank loans while preparing a bond to settle the remaining arrears linked to the development of the country’s transport infrastructure.
The temporary loan allowed immediate payments to contractors under the Kenya National Highways Authority, Kenya Rural Roads Authority, and Kenya Urban Roads Authority, unlocking projects that had previously been stalled.
Settling these arrears has already produced noticeable economic effects, with lending to construction firms rising 21.7 per cent year-on-year to Sh159.6 billion, while cement consumption grew 23.9 per cent, reflecting heightened sector activity.
The broader economy also benefited, with GDP growth reaching 5.0 per cent in the second quarter of 2025, up from 4.6 per cent previously.
While the bank loan has helped the government manage immediate cash-flow pressures in the road sector, overall government arrears remain high at Sh526 billion.
The success of the planned bond will depend on sufficient investor demand.
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