China’s Back, Pensions Are In: Inside Kenya’s $1.5 Billion Toll Highway Bet
- Derry Thornalley
- 18 hours ago
- 6 min read
When President William Ruto’s government announced a new $1.5 billion highway expansion last week, it was the flags that told the story: Chinese and Kenyan colours flying side by side as officials unveiled plans to rebuild the country’s most important transport corridor.
The project will upgrade sections of the road linking Mombasa, Nairobi and western Kenya, a route that carries much of the region’s trade to and from the Indian Ocean. It is also China’s biggest new infrastructure engagement in Kenya in years, after a period of cautious lending and tense debates over debt sustainability.
But what makes this project different is not just who is building it – two Chinese state-owned giants, China Road and Bridge Corporation and Shandong Hi-Speed Road and Bridge International – it is who is helping to pay for it.
At the heart of the funding structure sits Kenya’s own National Social Security Fund (NSSF).
The deal: 75% debt, 25% equity – with NSSF in the front row
According to project documents and officials’ briefings, the highway will be financed under a public–private partnership using a 75% debt, 25% equity model.
Debt is expected to come from Chinese commercial lenders and state-backed institutions such as the Export-Import Bank of China.
Equity will be provided by the Chinese contractors and Kenyan partners – with NSSF contributing about 45% of the equity in the phase where it is directly involved.
Construction is due to be completed by end-2027. Once finished, the road will enter a 28-year toll concession, allowing the operators to recover their investment and earn returns before handing the asset back to the state.
The concept is simple: instead of adding another large sovereign loan to Kenya’s already strained public balance sheet, the government wants users – not taxpayers – to pay over time, with institutional investors like NSSF taking a slice of the upside.
Supporters say it is a smart way to:
Modernise a vital trade corridor without immediately inflating headline public debt;
Attract long-term capital from pensions and insurers;
Signal that Kenya is open for business with Beijing again after the aborted US-backed toll road plan earlier this year.
Critics see something more troubling: pensioners being pushed to shoulder chunky project risk just as the broader fiscal picture darkens.
A big bet against a worsening debt backdrop
The highway announcement lands in the same week that Central Bank of Kenya (CBK) Governor Kamau Thuggedelivered one of his starkest warnings yet on the country’s finances.
According to CBK data presented to Parliament, Kenya’s public debt has climbed to about KSh 11.8 trillion in
FY 2024/25, up nearly 12% in a year and roughly 69% of GDP – well above the 55% anchor set in law.
Thugge told lawmakers that:
Kenya remains able to meet its obligations for now, but
A combination of heavy domestic borrowing, large upcoming maturities and revenue shortfalls has created serious liquidity challenges, squeezing the state’s ability to service its debt on time.
Independent analysts paint a similarly worrying picture. By April 2025, roughly KSh 11.5 trillion of public debt was split between KSh 5.3 trillion in external loans and KSh 6.2 trillion in domestic T-bills and bonds, with debt service consuming a large share of government revenue.
Against that backdrop, the PPP highway looks less like a neat workaround and more like a stress test of Kenya’s ability to use private capital without overloading it.
On one side, the state is trying to keep big-ticket infrastructure moving while promising the IMF and markets that it will rein in borrowing and shrink the deficit in coming years.
On the other, institutions like NSSF – custodians of millions of Kenyans’ retirement savings – are being asked to take on long-dated, illiquid exposure to projects whose success depends on traffic volumes, toll compliance and political stability over nearly three decades.
Pensions at the centre of the risk debate
The NSSF stake is particularly sensitive.
Supporters of the deal argue that:
Pension funds around the world invest in core infrastructure because it offers long-term, inflation-linked cash flows that match their liabilities;
Toll road concessions with strong traffic fundamentals can be high-quality assets if structured properly;
Kenya cannot rely indefinitely on foreign lenders to finance all its roads, ports and power plants.
Sceptics counter that:
Kenya’s domestic capital markets are still relatively shallow, leaving funds heavily exposed when large projects underperform or face delays;
Governance and transparency around PPPs have been mixed, and previous Chinese-funded projects – notably the Standard Gauge Railway – have raised questions about contract terms and contingent liabilities;
With public debt already at KSh 11.8 trillion and the CBK openly talking about a “high risk of debt distress”, asking pensions to take more project risk feels uncomfortably like shifting the problem from the Treasury’s balance sheet onto savers’.
In that context, the key question is less whether NSSF should invest – infrastructure can be a legitimate part of a diversified pension portfolio – and more how it does so, what share of assets is committed, and how the risk is monitored over time.
Where Verī Platform fits into Kenya’s infrastructure gamble
For Kenyan pension funds, insurers, banks and asset managers, the toll highway deal crystallises a broader challenge:
They are being nudged to finance domestic infrastructure and government deficits, directly and indirectly;
Their clients and beneficiaries expect competitive, risk-managed returns – not just patriotic balance sheets;
Regulators and rating agencies want clear oversight of currency, duration, credit and project risk across the entire portfolio.
Verī Platform is built to sit behind those institutions and help them navigate precisely this kind of landscape.
In a single, regulated environment, a Kenyan institution using Verī can:
Hold illiquid domestic assets – such as equity stakes in PPPs or long-dated infrastructure bonds – alongside liquid local government paper, NSE equities and diversified regional and global funds;
Connect to multiple custodians and registrars while maintaining a consolidated, look-through ledger at member and portfolio level;
Generate supervisor-ready reporting that shows, in one place, how much of a scheme’s assets are concentrated in Kenyan sovereign risk, specific projects like the Mombasa–Nairobi corridor, or particular sectors and currencies.
For NSSF and other schemes considering similar investments, that means being able to:
Ring-fence and monitor toll-road exposure as a defined asset bucket;
Stress-test portfolios against scenarios such as lower-than-expected traffic, FX shocks, or changes in toll policy;
Demonstrate to trustees, regulators and members that domestic infrastructure bets are balanced by diversified, liquid assets elsewhere.
In a world where infrastructure is increasingly funded from pension savings rather than foreign loans, that kind of architecture moves from “nice to have” to hard requirement.
A corridor lined with opportunity – and risk
The new highway, if delivered on time and run well, could be transformative: easing congestion between Mombasa and the interior, cutting logistics costs, and strengthening Kenya’s role as the gateway for Uganda, Rwanda, South Sudan and eastern DRC.
It is also a test of three overlapping bets:
That China’s return to big-ticket infrastructure in Kenya can be managed on more sustainable, transparent terms than in the last decade.
That PPP models really can shift risk and cost away from the exchequer without simply loading it onto pensioners and local investors.
That institutions and platforms – from CBK and the Treasury to NSSF, fund managers and systems like Verī – can track, manage and disclose those risks well enough to keep public confidence intact.
For now, the excavators are rolling and the memoranda have been signed. The trade corridor is getting its long-promised upgrade. Whether the project goes down in history as a model of innovative financing or a case study in overreach will depend on what happens long after the ribbon-cutting – when, for nearly three decades, every toll paid on that road will, in a small way, be paying back Kenya’s future retirees.
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