Contractors owed by the Ministry of Roads and Infrastructure will begin receiving part of their outstanding payments within the next month, following the government’s successful move to raise Sh62 billion through the securitization of the Road Maintenance Levy Fund.
Appearing before the National Assembly Public Debt and Privatization Committee, Roads Principal Secretary Eng. Joseph Mbugua revealed that the ministry had already used the funds to settle approximately 40 percent of the pending bills owed to contractors.“As at July 2024, the ministry owed Sh166.8 billion for completed road works, and an additional Sh800 billion for ongoing and outstanding projects,” Mbugua told lawmakers. “We are actively exploring alternative financing models to ease the burden and ensure continued implementation of key infrastructure projects.”
The PS further disclosed that the Treasury had also secured a loan of Sh36 billion from the Chinese government to finance 15 road projects currently being undertaken by Chinese contractors across various regions in the country.
However, members of the committee expressed concern over the government’s increasing reliance on future revenue streams to secure loans, warning that the securitization strategy could worsen the national debt burden.
MPs questioned the sustainability of the approach, noting that leveraging future income from the Road Maintenance Levy Fund—a critical resource for maintaining the country’s road network—could limit future fiscal flexibility.“The securitization of revenue to pay contractors may solve short-term liquidity issues, but it potentially mortgages our future earnings,” said one committee member. “We must be cautious not to fuel a growing debt trap.”
In response, PS Mbugua said the Ministry of Transport is now seeking enhanced budgetary allocations from Parliament to reduce dependency on borrowed funds for settling infrastructure-related debts.
The pressure to clear mounting contractor arrears comes amid growing scrutiny over delayed infrastructure projects, many of which are considered vital for national development and economic growth.
As the government seeks to balance infrastructure expansion with fiscal responsibility, the debate continues over the appropriate mix of domestic resources, external loans, and innovative financing strategies.
