Home ECONOMY Agency seeks Sh360bn from road bond issues

Agency seeks Sh360bn from road bond issues

by biasharadigest

Agency seeks Sh360bn from road bond issues

Transport minister James Macharia
Transport minister James Macharia. FILE PHOTO | NMG 

Kenya has outlined plans to raise up to Sh360 billion in the next three years through the issuance of road bonds as the State lobbies MPs to pass a legal framework enabling the floating such debt instruments.

The bonds the Kenya Roads Board (KRB) seeks to issue will finance the building of new roads and maintenance of existing networks, most of which have been damaged by the recent heavy rains.

At the moment, Kenya which mobilises its roads funds by collecting maintenance levy on fuel consumers also occasionally floats infrastructure bonds to raise cash for the purpose.

“KRB has successfully managed the Road Maintenance Levy Fund over 20 years and is, therefore, well-positioned to lead the issuance of a road bond.

“KRB recommends issuance of a Road Development Bond to complete ongoing works in at least three years,” said Transport minister James Macharia in a brief to MPs.


He said with the annual National Treasury allocation of Sh65 billion to finance the Road Development Bond, the amount could secure financing of about Sh360 billion issued in tranches.

“The Road Development Bond offers the National Government an off-balance sheet solution that will not have an impact on debt sustainability,” he said in submissions to the National Assembly Transport Committee. The committee approved the Kenya Roads Board Act 2019 that gives the agency the power to borrow and leverage the Kenya Roads Fund.

The new Act came into force on December 6 following assent by President Uhuru Kenyatta.

The KRB, with the approval of the Cabinet Secretary for Roads and the Finance minister, will have the power to borrow and leverage the fund to meet financial demands for road development, rehabilitation and maintenance.

The new law exempts development budget and any funds raised through borrowing from the fund’s allocation formula stipulated in the principal Act.

Parliament is expected to receive regulations from Mr Macharia for smooth implementation of the Act.

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