Amidst Kenya’s struggle with elevated fuel costs, a particular term has consistently emerged in public discussions: securitisation. Government officials and economists frequently reference this term while clarifying why lowering the fuel levy might not be as simple as certain politicians imply. Nevertheless, for numerous Kenyans, this concept largely remains unknown.
In its most basic form, securitisation involves converting future earnings into immediate spendable funds. Consider a landlord anticipating monthly rent collections from tenants over the coming decade. Rather than waiting for these payments to trickle in, the landlord engages a financier and utilizes those future rental incomes as collateral for an immediate substantial lump-sum payment. The financier provides the funds upfront and subsequently receives repayment through the future rent collections. This, fundamentally, constitutes securitisation.
Governments employ this identical principle when requiring substantial funds urgently and possessing dependable revenue streams anticipated to persist in the future to settle the incurred debt. For Kenya, the relevant revenue source is the Road Maintenance Levy Fund (RMLF), commonly referred to as the fuel levy. Each liter of petrol and diesel sold in Kenya incurs a Road Maintenance Levy fixed at Sh25. The levy is collected by the Kenya Revenue Authority at fuel stations and directed into the Road Maintenance Levy Fund, which is overseen by the Kenya Roads Board.
Historically, these funds have been allocated for maintaining roads nationwide via the Kenya National Highways Authority (KeNHA), Kenya Urban Roads Authority (KURA), and Kenya Rural Roads Authority (KeRRA) for tasks including pothole repairs, drainage upkeep, vegetation management, and restoration of deteriorated roadways. For many years, this operated as a pay-as-you-go system where motorists contributed through annual road license fees prior to the 1993 introduction of the Road Maintenance Levy. This shifted as the licensing system encountered enforcement difficulties and proved insufficient for financing the rapidly expanding road network amid escalating pressure from delayed infrastructure initiatives and accumulating unpaid contractor invoices.
The new legislation transferred the fee collection responsibility directly to fuel pumps, initially set at Sh3 per liter, to establish a more sustainable, consumption-based revenue flow. As time progressed and Kenya’s road network expanded at a rapid pace, the government required significant funds immediately without waiting years for fuel levy collections to build up. The solution implemented was securitisation. In April 2025, the government securitised a portion of the Road Maintenance Levy Fund by designating Sh7 from the Sh25 levy as collateral to secure Sh175 billion through bond issuances. Instead of anticipating years of future collections, the government obtained the funds immediately and allocated them toward settling outstanding invoices related to delayed road projects.
Several months later, in November 2025, the Cabinet sanctioned the securitisation of an additional Sh5 per liter from the levy to obtain another Sh120 billion. Collectively, these two agreements allocated Sh12 from each Sh25 collected via the fuel levy to debt repayment over 10 years from each issuance. Practically speaking, nearly half of the fuel levy is now designated for servicing the debt incurred through securitisation. This implies that for the coming decade, road agencies will effectively have direct access to only Sh13 of the Sh25 levy for road maintenance purposes. This reality has positioned securitisation at the core of the ongoing fuel price discourse.
Following the substantial fuel price hike announced by the Energy and Petroleum Regulatory Authority (EPRA) on May 14, transport operators conducted a nationwide strike that disrupted transportation in key urban centers for two consecutive days. Matatus, online taxi services, cargo haulers, and motorcycle taxis suspended operations in response to the price increase of Super Petrol by Sh16.65 per liter and Diesel by Sh46.29. These demonstrations prompted renewed demands for governmental measures to lower fuel prices. Proposals advanced by Kiharu MP Ndindi Nyoro and Siaya Governor James Orengo include reducing the fuel levy by Sh7 per liter to revert to the 2024 standard of Sh18. These leaders contend that this measure, supplemented by other tax modifications, could substantially decrease diesel prices and alleviate living expenses.
Superficially, this proposal seems direct. If motorists pay a reduced levy, fuel prices should decrease. However, critics assert the issue is considerably more complex due to existing commitments tied to the levy. Former Transport Principal Secretary Irungu Nyakera has become one of the most prominent voices warning against anticipating substantial reductions. ‘The issue lies not with the levy itself, but with the fact that nearly half of it has already been securitised,’ he stated. According to Nyakera, diminishing the levy without resolving the securitisation agreements would substantially compromise road maintenance funding and possibly impair the government’s capacity to fulfill bond-related obligations.
Further reducing the remaining Sh13 allocated for maintenance by an additional Sh7 would leave only Sh6 per liter for maintaining the nation’s road infrastructure. This would present a new predicament – more affordable fuel but deteriorating road conditions. The government has largely echoed these same concerns. Deputy President Kithure Kindiki has advocated for maintaining the levy, asserting that fuel-derived taxes are crucial for preserving road infrastructure and financing additional public services. Treasury CS John Mbadi has likewise maintained that the government cannot merely abolish fuel-related taxes and levies without generating broader fiscal complications.
Simultaneously, the government emphasizes that it has already allocated billions in fuel subsidies to protect consumers from the effects of the Middle East conflict, which has destabilized global oil markets and increased shipping, insurance, and logistics expenses. Advocates of securitisation highlight its benefits. It enables governments to access substantial capital rapidly, complete delayed projects, settle outstanding invoices, and stimulate economic activity without raising taxes or incurring additional borrowing. Critics, however, caution that this method essentially commits future revenues prior to collection, diminishing flexibility for future administrations and restricting policy alternatives when economic circumstances evolve.
Nyoro has been notably outspoken regarding the securitisation of fuel levies on social media, characterizing the arrangement as equivalent to ‘auctioning the nation’s future’. As Kenyans anticipate the results of discussions between the government and transport stakeholders concerning escalating pump prices, attention is focused on Parliament where pertinent committees await engagement with the Kiharu MP regarding his proposal to decrease the fuel levy by Sh7. For everyday motorists, the debate fundamentally reduces to a straightforward question: why can’t the government simply reduce the fuel levy?
The explanation is straightforward it cannot. The government has already allocated tomorrow’s fuel levy revenues to current expenditures. For the subsequent decade, a substantial portion of what motorists pay at fuel stations will continue flowing not directly to road maintenance, but rather toward repaying the debt secured against those future collections.