Lawyer writes to Mbadi over debt securitization

Cabinet Secretary for National Treasury and Economic Planning John Mbadi before the Standing Committee on Devolution and Intergovernmental Relations to deliberate on the commercial bank accounts operated by county governments contrary to the law at Bunge Towers, Parliament, Nairobi. July 17th,2025.[Elvis Ogina, Standard] A lawyer has written to Treasury Cabinet Secretary John Mbadi seeking more information on the country's securitisation of the country's future income to take loans. In his letter, Kiroko Ndegwa wants the CS to give details over the move to securitise the Sports Fund and Fuel Levy. The letter says the burden or the benefits of resources acquired through borrowing shall be shared equitably by the present and future generations, hence the need to make the process details public. "Article 214 thereof designates the public debt as a charge on the Consolidated Fund but allows for an Act of Parliament to allocate portions of it to other funds," the lawyer says. According to Ndegwa, Article 214 lays down what constitutes a public debt and financial obligations related to loans raised or guaranteed by the national government. Transport CS Davis Chirchir recently told the Senate Plenary that the government had approved the sale of Sh7 out of the existing Sh25 per litre of the Road Maintenance Levy to a Special Purpose Vehicle (SPV). "The move allows the SPV to raise immediate funds from investors using future revenues as collateral, a financial structure known as securitisation," Ndegwa says. He adds that through this, the government will get approximately Sh185 billion to pay some pending bills. The lawyer links the July fuel price hike to this move by the Kenya Kwanza administration. He further faults the move by President William Ruto to launch a bond at the Nairobi Securities Exchange to fund the construction of the controversial Talanta Sports City Stadium. The 15-year Linzi 003 Infrastructure Asset-backed security will raise Sh44 billion. "It affirms our confidence in market-based financing and demonstrates how we can sustainably fund large-scale infrastructure through our capital markets," said President Ruto during the July 23 launch. The 60,000-seater stadium is part of the grounds that Kenya will use to host the 2027 Africa Cup of Nations. Dr Ruto defended the move, saying securitisation was helping the country not to rely on external loans as well as reduce borrowing costs. Ndegwa says that Mbadi is bound by the principles of Public Finance as outlined in Article 201, which call for openness, accountability and public participation in financial matters. "It also highlights the need for a fair distribution of the burden of taxation, equitable sharing of national revenue, and prudent use of public money." In the letter, Ndegwa says that the pressing need to clear pending bills and finance stalled projects flies in the face of Article 201. He says there is no need to burden future generations with debt. "Is Kenya in an existential crisis to warrant the securitisation of future income, the pending bills to be paid, and was there a budget for the projects?" poses Ndegwa. The lawyer questions if the stalled projects had money allocated to them, if the funds were released to the contractors, and if there was misappropriation. "Is the public aware of the projects and the cost implications in consonance with the requirement for public participation under Article 10 of the Constitution?" The lawyer argues that securitisation of levies jeopardises the future revenues for the generations to come and kills the hope of fuel price stability. Ndegwa says that Kenyans should experience relief when global oil markets stabilise, as it will increase their spending power to allow for the revitalisation of our dilapidated economy. The continued borrowing burden falls on the shoulders of Kenyans, whose pockets are reeling from the effects of the high cost of living. He wants Mbadi to provide a list of levies secured by the government with citations of the enabling Acts of Parliament, details of public funds created to collect the levies and how much the government has borrowed. He also wants the identity of the lenders revealed, how the borrowed money has been used, the interest on the loans, how much Kenyans will pay by the end of the loan period and the terms in case of a default. Ndegwa further questions if the loans have been included as part of the national debt, if it is sovereign guaranteed, and copies of feasibility study reports to warrant the securitisation.

Lawyer writes to Mbadi over debt securitization

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