The government has settled Sh93 billion road sector pending bills using bank loans ahead of the issuance of a bond to clear the arrears accumulated in building transport infrastructure.
The Treasury says the State tapped a Sh104 billion loan from a syndicate of commercial banks to settle verified pending bills in the sector, allowing road contractors to resume abandoned projects.
The payments have revitalised growth for the building and construction sector, which fell into a technical recession, marking two consecutive quarters of contraction to September last year.
The government says it is inching closer to raising Sh175 billion from a roads bond, which is expected to clear the commercial bank bridge facility and foot the remaining arrears to contractors.
“We have already paid Sh93 billion to road contractors who have since resumed work, and I am sure you can attest that road construction has resumed across the country,” said Treasury Cabinet Secretary John Mbadi on Tuesday.
“We started by going for a bridge facility where we have raised Sh104 billion. This shall be extinguished once the road bond is finalised. We are currently finalising the market sounding process ahead of the bond issuance, which will take place this month, where we aim to raise Sh175 billion in the first tranche.”
Investors in the roads bond will be paid using part of the collections from the Roads Maintenance Levy Fund, which has been securitised using collections of Sh7 per litre of petrol or diesel sold.
Kenya increased the fuel levy from Sh18 to Sh25 per litre in July 2024, with the additional charge being expected to cover payments to the road’s bond investors.
The Trade and Development Bank, KCB Bank Kenya, Absa Bank Kenya and UBA Kenya Bank have been the primary financiers for the bridge facility, with UBA estimating its disbursement to the fund at Sh12.9 billion ($100 million), backed by its Nigerian parent.
The Kenya Roads Board has been wiring drawings from the bridge facility to road agencies, including the Kenya National Highways Authority, the Kenya Rural Roads Authority and the Kenya Urban Roads Authority, to meet contractor payments.
Construction sector activities grew by 5.7 percent in the second quarter of 2025, offsetting a 3.7 percent contraction at the same time last year, as per data from the Kenya National Bureau of Statistics.
The recovery helped lift overall gross domestic product growth for the period to five percent from 4.6 percent previously.
Cement consumption increased by 23.9 percent to stand at 2,424,400 tonnes from 1,957,100 tonnes in the corresponding quarter of 2024.
The quantity of imported bitumen rose to 22,659,300 tonnes from 15,566,200 tonnes, while iron and steel imports stood at 526,606,400 tonnes from 222,112,300 tonnes previously.
The construction sector has also seen an uptick in lending, where credit to enterprises in the sector grew by 21.7 percent to stand at Sh159.6 billion in the 12 months to June 2025 from Sh131.1 billion a year earlier.
“Payments to the road sector have helped in boosting economic growth,” said the Treasury minister.
A task force appointed by President William Ruto is expected to complete the verification of all pending bills next month before forwarding a report to the Exchequer, detailing initiatives to clear the arrears.
“We have put up diverse financing strategies and payment plans to deal with pending bills once the final report is received,” said Mr Mbadi.
National government pending bills stood at Sh526 billion in June, rising from Sh421.6 billion in March to defy the road sector payments.
