Kenya has acknowledged that rising adoption of electric vehicles will undermine the Road Maintenance Levy, which is currently financed through petrol and diesel consumption.
- •According to the Ministry of Roads and Transport, EV adoption led to a shortfall of about KSh 2 billion in 2025 and that figure will explode to KSh 89.5 billion in 2043.
- •The Road Maintenance Levy currently stands at KSh 25 per litre, following an increase introduced in 2024 to shore up funding for road works amid rising construction costs.
- •Of this amount, KSh 7 per litre has been securitized to raise KSh 175 billion through a Special Purpose Vehicle, with future levy collections pledged to service the financing.
In the state's e-mobility policy, projections show that under current growth trends, revenues to the Road Maintenance Levy Fund will begin declining from 2037 onward as internal combustion engine vehicle registrations peak and then fall.
According to the Kenya Roads Board study cited in the report, new EV registrations are expected to match new ICE vehicle registrations by 2042. The document frames this shift as structurally unavoidable, noting that improved fuel efficiency, lack of fuel levy indexation to inflation, and the growing share of electric vehicles will compound the revenue shortfall over time.
During the launch of the national electric mobility policy aimed at accelerating the transition away from internal combustion engines, the government reported that the number of registered EVs in Kenya rose to 24,754 by the end of December 2025.
Growth in EVs has been concentrated almost entirely in electric motorcycles, which have emerged as the primary entry point for electric mobility due to its lower operating costs and suitability for commercial transport use. Moreover, the proliferation of local assemblers like Spiro, Roam, and Ampersand has introduced creative financing agreements that have propelled adoption.
Even at that pace, the policy notes that current adoption trends remain below national targets, which assume significantly faster year-on-year growth to meet climate and energy transition objectives.
In the 2024/25 financial year, collections by the Kenya Revenue Authority (KRA) from the Road Maintenance Levy rose by about 50% to KSh 119.7 billion. The sharp increase was driven largely by a 13% rise in fuel and oil product volumes.
The surge in collections intensified debate over the levy’s role in Kenya’s broader fiscal strategy, which has been too reliant on fuel as an easy revenue earner. Even as oil prices globally remain low, Kenyans still have to pay more for their fuel as taxes and levies weigh down on it. A higher supply of EVs, coupled with tax breaks and incentives, is likely to cause a rapid shift from ICE vehicles as consumers attempt to escape the high cost of fuel.
What Comes Next?
In 2023, Kenya faced a fuel crisis as foreign-exchange reserves thinned and the government withdrew fuel subsidies to meet IMF targets. Oil marketers struggled to pay for imports, triggering queues at petrol stations and pushing pump prices above KSh 200 a litre.
To solve this crisis, Kenya struck a government-to-government fuel import deal with Gulf suppliers, allowing Kenya to defer payment for petroleum cargoes by up to six months. The arrangement eased immediate pressure on scarce dollars, stabilized supply, and bought policymakers time.
However, it was a lesson that Kenya's import bill and greenback health was at a precarious position. Globally, EV adoption is regarded by governments as an opportunity to rely on less fuel imports that could strain the overall economy. For Kenya, less fuel imports are good for the forex reserves but terrible for revenue.
The government is vague on what alternative revenues it shall develop to reduce over reliance on the fuel levy as EVs become more popular on Kenyan roads. Countries with high EV penetration are increasingly implementing alternative mechanisms including annual registration fees, per-mile or road-use charges, and modest surcharges on electricity used for charging.
These measures aim to offset the decline in petrol and diesel excise revenue while maintaining funding for road maintenance and infrastructure. Many nations initially encouraged EV adoption through tax incentives, but as markets mature, exemptions are being scaled back and new levies introduced.
The United Kingdom, New Zealand, and Iceland have rolled out mileage-based charges or higher EV registration fees to ensure that electric vehicle owners contribute to infrastructure costs.
