Kenya’s $223 billion infrastructure dream is slipping away. With rising debt, fuel levy securitisation, and weak project execution, the country must rethink how it funds and manages development.
According to the Global Infrastructure Outlook developed by the Global Infrastructure Hub and Oxford Economics, Kenya will need about $223 billion in infrastructure investment between 2016 and 2040 to sustain economic growth, urbanisation, and social transformation (Global Infrastructure Hub, 2023).
Spread over 25 years, this amounts to roughly $8.9 billion annually, covering transport, energy, water, and communications. Nearly a decade into this timeline, Kenya’s investment path reveals the country is significantly behind target.
Government expenditure records since 2016 show that development spending has remained far below what the economy requires.
Treasury’s 2024 data show annual development budgets have averaged between Sh600 billion and Sh740 billion, equivalent to $4.4 billion to $5.5 billion.
Yet, only around 60 percent of this typically goes into physical infrastructure such as roads, energy, and water works, according to the Parliamentary Budget Office (in 2023). This translates to about Sh350-Sh450 billion or $2.6 billion to 3.3 billion a year dedicated to infrastructure.
The problem is compounded by low absorption rates. Treasury data show that ministries and agencies frequently spend less than what is allocated, largely due to delayed procurement, financing bottlenecks, and weak project management, according to the Treasury Quarterly Budget Review of 2024.
In the 2023-24 fiscal year, only Sh434 billion of the Sh587 billion allocated for development was spent-an absorption rate of just 74 percent. As a result, even the modest allocations are underutilised, undermining project delivery.
On aggregate, infrastructure investment between 2016 and 2024 is estimated at $23 billion to $25 billion, or roughly 11 percent of the projected requirement (Oxford Economics, 2023).
Even after factoring in donor and private participation, the cumulative figure likely does not exceed $28 billion, leaving a $195 billion gap over the remaining 16 years. To meet the 2040 target, Kenya must therefore invest around $12.4 billion annually from 2025 to 2040-almost four times the current rate.
Achieving this would require infrastructure investment to grow by eight percent annually, or by 13 percent to close the gap within a decade.
This ambition faces a stiff fiscal headwind. Kenya’s public debt has ballooned from 42 percent of gross domestic product in 2013 to over 70 percent in 2024, according to the Central Bank of Kenya. Debt service obligations are projected to hit Sh1.9 trillion in the 2025-26 fiscal year, consuming more than half of total government revenue (National Treasury Budget Policy Statement, 2025).
This leaves little fiscal space for new capital spending and forces the government to rely heavily on off-balance-sheet financing mechanisms.
One such mechanism is the securitisation of the fuel levy, through which the Kenya Roads Board (KRB) has pledged future road maintenance revenues to raise infrastructure capital.
The government has already securitised Sh175 billion by diverting Sh7 out of every Sh25 per litre from the Road Maintenance Levy Fund to a special purpose vehicle.
As of mid-2025, about Sh60 billion has been raised and disbursed to contractors, helping to revive over 580 stalled road projects. Financial institutions, including the United Bank for Africa, have collectively invested over Sh16.38 billion in the scheme.
While the programme is structured to avoid direct government guarantees, it effectively shifts borrowing off the national balance sheet by mortgaging future fuel revenues.
Other off-balance-sheet strategies include public-private partnerships (PPPs).
Since Kenya adopted the PPP framework in 2013, about Sh140.7 billion in private capital has been mobilised into infrastructure, including flagship projects such as the Sh88 billion Nairobi Expressway and the Kenyatta University Teaching, Referral and Research Hospital.
However, PPP inflows have sharply declined: private investment plunged from Sh80.6 billion in 2022 to Sh4.3 billion in 2024. The Treasury reports that 39 PPP projects worth a combined $13 billion (Sh1.69 trillion) have been approved, but progress has been slow due to regulatory delays, financing uncertainty, and risk allocation concerns.
For fiscal 2025-26, the Treasury targets Sh70 billion worth of PPP projects in the energy, housing, health, and transport sectors.
The most promising financing frontier lies in mobilising domestic long-term capital.
Kenya’s pension funds now hold more than Sh1.6 trillion in assets, yet less than two percent is invested in infrastructure (Retirement Benefits Authority, 2024). Channelling even 10 percent of these funds could significantly close the investment gap. Additionally, implementing the Kenya Sovereign Infrastructure Fund would provide patient capital for strategic projects while easing reliance on commercial borrowing.
Still, Kenya’s challenge is not merely one of financing-it is also about efficiency. The Office of the Auditor-General has repeatedly flagged inflated project costs, delays, and incomplete works. Without addressing governance weaknesses, even increased funding will yield poor outcomes.
Transparent project appraisal, stronger monitoring frameworks, and prioritisation of high-return investments are critical for value creation. The focus must move from the volume of spending to the quality and sustainability of investment.
Infrastructure is the backbone of Kenya’s economic future. Roads, ports, water systems, and energy networks shape productivity, lower logistics costs, and attract investment. Yet, with less than one-eighth of the 2040 target achieved in nine years, the gap threatens to undermine Vision 2030’s goals.
To meet the $223 billion target, Kenya needs fiscal discipline and innovation. Securitisation, PPPs, pension mobilisation, and sovereign funds all have roles-but they must be guided by clear governance and risk frameworks. Otherwise, off-balance-sheet financing will simply shift debt burdens into the future without improving real infrastructure outcomes.
Kenya’s infrastructure journey is at a crossroads. Unless the country realigns its priorities and expands domestic financing while tightening governance, the 2040 horizon will arrive with unfulfilled promises, congested highways, and the same power and water deficits that have constrained growth for decades.
Edmands not only more money but smarter management of what is already in hand.