The Government of Kenya has settled KShs 93 billion of pending bills in the road sector using part of a KShs 104 billion syndicated bank loan, ahead of a planned road bond that will fully clear these arrears and fund ongoing transport infrastructure projects.
- •The bridge loan enabled immediate payments to contractors under the Kenya National Highways Authority, Kenya Rural Roads Authority, and Kenya Urban Roads Authority, unlocking previously stalled projects.
- • The planned KShs 175 billion bond will be secured by the Kenya Roads Board’s Road Maintenance Levy Fund, funded by the increased fuel levy, ensuring that repayment is tied to a predictable revenue stream.
- •Clearing these arrears has had immediate economic effects. Lending to construction enterprises rose 21.7% year-on-year to KShs 159.6 billion, while cement consumption increased 23.9%, reflecting heightened activity.
The broader economy also benefited, with GDP growth at 5.0% in Q2 2025, up from 4.6% previously.
The bank loan has allowed the government to address immediate cash-flow pressures in the road sector- overall government arrears remain high at KShs 526 billion, highlighting ongoing fiscal challenges. The planned bond will only succeed if there is sufficient investor demand.
Clearing KShs 93 billion in road-sector arrears removes a significant backlog, but its impact will depend on whether follow-up measures- such as timely project execution and effective fund management- are maintained.
