The financing of road construction and maintenance in Kenya has historically relied heavily on the annual budget allocated by the National Treasury and proceeds collected from the Road Maintenance Levy Fund.
However, this traditional reliance has often resulted in significant challenges, including budgetary constraints, high unit costs, and slow project completion, leaving a substantial infrastructure gap. Recognizing the need for alternative financing and delivery methodologies, especially in line with the country’s Vision 2030 aspirations, the government chose to leverage the Public-Private Partnership (PPP) framework.
This decision subsequently led to the introduction of the innovative Roads Annuity Programme (RAP), often referred to as the “Roads 10,000 Programme,” which the Cabinet approved in March 2015, planning for the upgrade of up to 10,000 kilometres of roads.
Under this PPP arrangement, the private sector assumes the commercial functions traditionally held by the public sector, including the design, financing, construction, and operation of the road projects.
This basically shifts much of the project risk away from the government. The national government commits to repay the contractor’s financing portion through equal instalments, known as annuities, over a defined period, with payments commencing once the road is successfully completed. This structure is a primary method for continuing to deliver infrastructure without adding an immediate fiscal debt burden to Kenyans.
To ensure the sustainability and reliability of these payments, the Road Annuity Fund was established pursuant to the Public Finance Management (Roads Annuity Fund) Regulations, 2015. The fund’s explicit objective is to provide the necessary finances to meet the national government’s annuity payment obligations for road development and maintenance under the Annuity Programme.
The Fund is primarily capitalized by dedicated revenue streams, consisting of money appropriated by Parliament and allocations derived from fuel taxes, such as the Roads Maintenance Levy Fund (RMLF).
For instance, three shillings per litre of fuel sold is specifically allocated to this Annuity Fund. Governance of this critical financial mechanism falls under an Oversight Committee, chaired by the Principal Secretary responsible for finance, while the day-to-day administration is managed by the Principal Secretary responsible for roads.
Accountability is central to the Annuity Programme, as payments are rigorously performance-linked. A contracting authority, such as the Kenya National Highways Authority (KeNHA), Kenya Rural Roads Authority (KeRRA), or Kenya Urban Roads Authority (KURA), is only permitted to request payments after an Independent Engineer, a suitably qualified professional, certifies that the contractor has met all contractual obligations detailed in the project agreement.
This stringent condition helps to eliminate poor workmanship and assures long-term maintenance standards. Furthermore, financial reports confirm the liquidity of the mechanism.
The Annuity Programme model has been actively implemented through various regional road projects. Notable projects financed under this model include the 91-kilometer Ngong–Kiserian–Isinya–Imaroro Road Project (Lot 33) in Kajiado County, implemented through Kenya Rural Roads Authority (KeRRA), where the private promoter, Intex RAF Ltd, financed the bulk of construction costs.
Other projects include Lot 15, which upgraded 44.7 kilometres of identified town roads across six counties;Nyeri, Kirinyaga, Murang’a, Embu, Tharaka Nithi, and Laikipia. Additionally, Lot 18 focused on 35.1 kilometers of identified town roads across Western Kenya, spanning Kakamega, Vihiga, Bungoma, and Busia Counties.
Through the mechanism of PPPs and the predictable funding provided by the Roads Annuity Fund, the national government continues to strategically finance critical infrastructure, ensuring that major development goals are met while maintaining fiscal prudence.
