Treasury reveals Sh30 billion paid to fund road projects across Kenya
Kenya has disbursed Sh30.89 billion to banks and construction firms for roads developed under the government’s annuity programme across 11 counties.
This model allows private contractors to build and maintain roads for a fixed period, with the government gradually repaying their share of the project cost through scheduled instalments once construction is completed.
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Under this arrangement, both the government and contractors contribute to the total cost of the road projects.
Contractors often secure loans from commercial banks to fund their portion, which the government later reimburses over time, ensuring continuous maintenance and completion of the roads.
Treasury records indicate that Sh20.56 billion went to lenders who supported the construction of 90.55 kilometres of roads in Kajiado County.
An additional Sh5.94 billion has been paid for 44.72 kilometres of roads linking six counties in central Kenya, while Sh4.39 billion has gone to cover 35.3 kilometres of roads in western Kenya.
The Kajiado County roads, designated Lot 33, connect Ngong to Isinya and Kajiado to Imaroro, and have been in operation since May 2018.
Roads in Central Kenya, Lot 15, connect towns in Nyeri, Kirinyaga, Murang’a, Embu, Laikipia, and Tharaka Nithi, and have been in use since February 2022. Lot 18 in western Kenya links Kakamega, Vihiga, Bungoma, and Busia.
“Based on the respective SPs (service providers) financial performance and the directors for the seven projects are of the opinion that the companies will continue operations for the foreseeable future,” the Treasury stated.
The total cost of the three projects is approximately $230.92 million (Sh29.82 billion), covering a combined 170.57 kilometres of roads.
The contractors have agreed to operate and maintain these roads for 10 years, during which they will recover their investment and settle loans obtained from banks.
The annuity programme was designed to allow the government to develop crucial road infrastructure without immediately straining public finances.
Payments to investors are drawn from the Roads Maintenance Levy, currently set at Sh25 per litre of petrol and diesel, up from Sh18 last year.
The Roads Annuity Fund, established under the Public Finance Management (Roads Annuity Fund) Regulations 2015, ensures that funds are available to meet the government’s commitments under the scheme.
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