Kenya pays KSh4.09 billion to cancel Northern road project

Kenya’s government has paid KSh4.09 billion to investors and contractors to cancel a major road project in the north, revealing the expensive consequences of scrapping parts of its Roads Annuity Programme.

The payment, approved on 12 November 2025, settles termination costs for the 143-kilometre Modogashe-Habasweini-Samatar/Rhamu-Mandera road. The project was cancelled in 2024 following a review that found it unaffordable for taxpayers.

The Roads Annuity Programme was designed to accelerate infrastructure development across Kenya by leveraging private sector financing. Private contractors would construct, operate and maintain roads, with the government making annuity payments over a set period. The goal was to expand the paved network without straining immediate budgets.

However, shifting economic conditions and affordability assessments led to the termination of this lot. This marks the second such cancellation under the programme. The earlier termination of the 63-kilometre Illasit-Njukini-Taveta road resulted in a KSh436.9 million payout. Together, the exit costs now total KSh4.53 billion.

In response, authorities have pivoted to conventional funding mechanisms. The government is collaborating with the World Bank to advance the broader Isiolo-Mandera highway using engineering, procurement and construction contracts. This 750-kilometre artery is vital for linking Isiolo, Wajir and Mandera counties.

President William Ruto has promised major advancements by 2027, with sections already under construction. Officials argue the new model reduces long-term commitments and allows faster implementation.

The decision has sparked frustration among Kenyans on social media. Citizens question spending billions on unbuilt projects amid high taxes and needs for hospitals and schools in the north.

“KSh4.09 billion could have transformed lives instead of compensating for cancelled plans,” one commentator noted. Critics see lost opportunities for the neglected region.

Despite controversy, the move may benefit northern Kenya by ensuring the Isiolo-Mandera highway is completed efficiently. Improved connectivity could boost trade, security and economic integration.

The Kenya National Highways Authority says honoring agreements prevents lawsuits and upholds investor confidence. As Kenya manages debt, this case highlights rigorous project evaluation needs.

The KSh4.09 billion payout exemplifies challenges in infrastructure financing. Success of restructured projects will show if the strategy delivers promised progress.