Nairobi — A Kenyan government agency plans to offer 150-billion shillings ($1.46bn) of bonds to fund repairs to roads that have suffered from neglect.
The Kenya Roads Board is seeking approval from the treasury to begin a July offering of the first tranche of debt. It will be backed by a tax on fuel imports, which provides a steady income, according to executive director Jacob Ruwa.
The nation, which has about 161,450km of mostly unpaved roads, needed to spend about 400-billion shillings on long-delayed upgrades and maintenance, Ruwa said.
"We decided to go for other funding methods to close this funding gap because it’s difficult to raise the fuel levy further after a 2016 increase," he said.
The financing would be directed to roads authorities and county governments to hire contractors for the work.
Kenya, East Africa’s largest economy and a major exporter of black tea and cut flowers, wants to overhaul its road network and improve links between its cities.
President Uhuru Kenyatta’s government in 2015 announced a road annuity fund to expedite construction, which would involve contractors paying for the expansions then being reimbursed on completion.
The fund, which stood at 24-billion shillings in June, had not yet been spent because of a slow uptake by private investors, Ruwa said.
Kenya’s fuel levy collected 69-billion shillings in the 12 months to June, compared with 51-billion shillings a year earlier, according to the roads agency.
A similar 50-billion shilling bond suggested in 2015 was delayed because of interest rate volatility, he said.