UBA Group managing director Oliver
Alawuba /HANDOUT
Kenya’s securitisation of the road maintenance levy has received a $150 million (Sh16.38 billion) backing from United Bank for Africa (UBA).
The government-backed initiative aimed at accelerating investment in road infrastructure seeks to raise $1.35 billion (Sh175 billion) by securitising a portion of the Road Maintenance Levy Fund.
The securitisation model is a financial mechanism that allows an institution to raise funds by leveraging predictable future income. It involves bundling a portion of expected cash flow and selling it to investors through a financial intermediary, typically called a Special Purpose Vehicle (SPV).
The program, launched by the Kenya Roads Board (KRB), will provide financing to support road maintenance, improve cash flows for contractors and reduce fiscal pressure on the government while expediting completion of key projects.
As part of this infrastructure project, UBA Kenya, a subsidiary of the United Bank for Africa Group, will bridge facility.
“Our $150 million commitment to the Roads Levy Securitization Program reflects our confidence in Kenya’s future and our belief in infrastructure as a foundation for trade, competitiveness and inclusive prosperity. This transaction is a demonstration of UBA’s ability to be a partner for infrastructure projects,” said UBA Group Managing Director Oliver Alawuba,
The commitment positions UBA as one of the largest financiers in the transaction.
The bank joins other domestic and international lenders in backing the plan, which is seen as critical for upgrading Kenya’s transport network and improving connectivity.
UBA Kenya CEO Mary Mulili said that the strategy is to continue positioning UBA as the go-to bank for infrastructure, trade, and inclusive finance.
The Ministry of Roads and Transport welcomed UBA’s commitment, saying it demonstrates investor confidence in Kenya’s infrastructure program and highlights the role of Pan-African financial institutions in mobilising capital for development projects.
KRB became the first public infrastructure agency in Kenya to apply this model by securitising part of its income from the Road Maintenance Levy Fund (RMLF).
This was achieved by committing Sh12 out of every Sh25 per litre of fuel collected over the next ten years.
The commitment was handed over to a Special Purpose Vehicle, which raised Sh175 billion upfront from private investors. As a result, KRB has now began clearing the backlog, unlock stalled road projects and reduce reliance on exchequer funding.
