The National Treasury has unveiled plans to raise Sh175 billion through a new infrastructure bond to be issued this month, with the cash directed to paying contractors and restarting major road works that had been halted for months.
The funding, to be handled through the Kenya Roads Board, will be key in easing the heavy burden of pending bills that left many projects stuck and slowed economic activity in the construction space.
Treasury Cabinet Secretary John Mbadi said the bond issue will build on a bridge financing programme worth Sh104 billion that government completed recently to help ease liquidity pressures faced by road firms.
Out of that amount, Sh93 billion has already been distributed to contractors, allowing many stalled projects to resume and speeding up work at sites that had nearly been abandoned.
During his monthly briefing to the media, Mbadi said the move marks a deliberate government push to deal with pending bills in the roads department and bring back jobs that were lost when contractors stopped work due to delayed payments.
“We are taking deliberate steps to address pending bills, especially in the roads sector. Once contractors are paid, work resumes, jobs return and economic momentum improves,” he stated.
He noted that the construction industry has bounced back strongly after recording slow growth earlier in the year, touching a 5.9 per cent expansion in the most recent quarter.
Mbadi added that the revival has been helped by renewed road works and increased demand in supporting areas such as transport, steel production and cement processing.
“When we had a 2.9 negative growth in construction industry a few months ago, we were concerned. And we realized that one of the reasons why we had negative growth in construction industry is because the road sector stalled completely due to pending bills,” Mbadi said.
The CS explained that the payment efforts have lifted overall economic performance, with the national growth rate reaching five per cent. Mbadi further said clearing verified pending bills remains a core priority and that the taskforce appointed earlier in the year will hand in its final report next month.
“The pending bills committee’s term was extended by six months, and they are expected to finalize and submit their report next month, this will be the last extension. We have already developed various financing strategies and payment plans to clear the verified bills once the report is received,” he noted.
The Treasury boss added that government is also working on broader reforms to stabilise finances and reassure investors. He confirmed that Kenya’s Development Policy Operation loan from the World Bank will be released once required policy steps are completed and the country submits its Letter of Development Policy.
He said Kenya is also negotiating “debt-for-development” arrangements with global lenders to replace more expensive commercial debt and reduce financing pressure on the budget.
