The Nairobi City County Government and the National Government of Kenya have formalised a financing framework to accelerate infrastructure upgrades in the capital, with President William Ruto announcing an initial KSh80 billion capital commitment across priority sectors.
- •The cooperation agreement establishes how projects in roads, water, housing, drainage and waste management will be financed, anchoring spending within Kenya’s Public Finance Management architecture rather than creating a standalone fund.
- •Under Clause VII of the agreement, both levels of government will jointly determine funding modalities, including cost-sharing formulas and fund flow mechanisms.
- •The signing came weeks after Nairobi Governor Johnson Sakaja disputed reports that he had ceded critical functions to the central government, with the new deal being significantly different from a prior agreement between the county administration under Mike Sonko, and the central government in 2020.
“Nairobi carries national, regional and global obligations but is funded largely through the same formula as other counties,” President Ruto said, adding that the pact is designed to close that gap “within the confines of the law and the Constitution.”
“The Nairobi City County Government retains its legal mandate. What is being enhanced is structured national government support where capital city performance affects the entire republic,” Ruto added.
The initial financing package of KSh 80bn will go to four primary project areas. The government will finance the modernisation and expansion of street lighting, including a transition toward solar solutions to reduce recurrent electricity costs. All new road contracts in Nairobi will incorporate lighting as a mandatory component. The plan also includes commercialising lighting poles through advertising revenue to support maintenance, effectively introducing a revenue-backed sustainability model.
Working with Kenya Power, the national government will invest in transformers and last-mile connections, alongside a prepaid bulk framework intended to reduce illegal connections and lower household electricity costs. A longer-term upgrade programme will expand metering, settlement lighting and transformer capacity in informal areas.
The second project will focus on roads, bridges and drainage in a multi-phase program. This will include KSh 2 billion to complete Phase I of urban roads within two months, KSh1.7 billion mobilised for a 57-kilometre package under Phase II starting in April, and KSh5 billion earmarked for Phase III procurement this financial year.
An additional KSh1 billion will be directed specifically toward drainage improvements to mitigate seasonal flooding risks. The county government is complementing national allocations with a KSh3.7 billion mobility and safety programme.
Housing and Solid Waste Management
The county has allocated land for material recovery facilities and transfer stations, committing KSh4 billion. The national government will inject KSh2 billion annually within existing frameworks to advance circular waste systems.
Separately, the Nairobi River Regeneration Programme, valued at KSh5 billion, is already underway, combining housing, sanitation and environmental restoration while employing more than 4,000 youth.
Beyond the KSh8 billion core package, the President noted that affordable housing contracts covering 11,000 units have been signed within Nairobi County, with roughly KSh2 billion being deployed by the Housing Ministry in the city alone.
The Transparency Question
Each party will finance projects within its constitutional mandate, with all programmes required to be properly costed and embedded within either national or county budgets before execution. This means projects must pass through Treasury ceilings, parliamentary and county assembly approvals, and statutory audit oversight.
Annual implementation reports to both the National Cabinet and the County Executive Committee will add a further political accountability layer. The design reduces legal and fiscal uncertainty, a key concern in past intergovernmental collaborations, while preserving accountability under the Public Finance Management Act.
