Treasury Cabinet Secretary John Mbadi has announced a major shift in Kenya’s infrastructure financing model, saying the government is moving away from heavy reliance on public debt and turning to private capital to close an annual funding gap estimated at Sh645 billion.
Speaking during the presentation of the Budget Highlights and Revenue Raising Measures for the 2026/27 financial year in Parliament on Thursday, Mbadi said the new approach will combine public-private partnerships, the National Infrastructure Fund, and targeted strategic investments to deliver key projects in roads, energy, water, and industrial development while protecting the country’s fiscal stability.
He stated that the gap in infrastructure funding remains too wide for the government’s development budget to cover on its own.
“Kenya’s infrastructure financing deficit stands at approximately US$5 billion (about Sh645 billion) every year. Our development budget, while growing, cannot close that gap alone. The era of financing every road, every power line, and every dam through government borrowing is over,” he stated.
Mbadi noted that depending too much on borrowing in the past had increased debt repayment pressure, reducing the amount of money available for essential services such as health, education, and social protection programmes.
He explained that despite these constraints, infrastructure investment since 2022 has continued to improve connectivity and support economic activity across the country.
According to him, 2,669 kilometres of roads have been constructed, while 132,000 kilometres of roads have been maintained nationwide.
In the energy sector, installed electricity generation capacity has grown to 3,272 megawatts as of April 2026. He said the national grid has also been strengthened through modernization of substations, reduced system losses, and expanded regional power links.
“The government has modernized substations, strengthened the national grid, reduced system losses and enhanced regional power interconnections,” Mbadi added.
He further said that 73.5 kilometres of transmission lines and related substations have been completed, while 200 kilometres of transmission lines have been energized. These include the Lessos-Kabarnet, Kitui-Wote, and Sondu-Homa Bay lines.
An additional 330 kilometres of distribution lines and seven substations have also been completed, while electricity access has expanded, with connected customers rising from 8.9 million to more than 10.2 million.
On industrial development, Mbadi said the government is using infrastructure to support value addition and job creation, pointing to the completion of 10 County Aggregation and Industrial Parks over the past three years.
He also highlighted the Rironi-Nakuru-Mau Summit Expressway as an example of the new financing model being adopted.
“What makes this project truly historic is not the speed of delivery; it is how it was financed through the participation of the National Social Security Fund, both as a debt and equity investor, alongside international investors,” he elaborated.
In the water sector, he said ongoing projects have expanded access to clean and safe water, with an additional six million Kenyans now connected. He cited the rehabilitation of the 58-kilometre Colonial Canal and the Reverse Osmosis Water Treatment Facility in Makueni County as part of these efforts.
Mbadi further said the National Infrastructure Fund will play a central role in mobilizing long-term financing by bringing together privatisation proceeds, pension funds, private equity, development finance institutions, and climate financing to support projects in highways, airports, seaports, energy, ICT, water, and irrigation.