Why Kenya has rejected Sh468bn Nairobi

By Newsflash Reporter

The National Treasury has shot down a Sh468 billion proposal to build an expressway linking Nairobi and Mombasa, citing doubts over the financial strength of the private firms involved, steep land acquisition costs, and the absence of policy guarantees that would ensure the project’s viability.

The 500-kilometre four-lane greenfield highway was championed by US private equity firm Everstrong Capital through its Kenyan arm, Usahihi Limited.

The road was to be delivered under a public–private partnership (PPP) model, with Everstrong designing, constructing, operating, and maintaining it for 30 years while collecting toll fees to recoup its investment.

Key partner’s exit shakes project foundations

At its 54th ordinary sitting on July 2, 2025, the Treasury’s PPP Committee declared that the proposal “does not meet the relevant criteria” under the PPP Act, 2021, and directed the Kenya National Highways Authority (KeNHA) to instead consider upgrading the existing Mombasa Highway rather than building a new alignment. One of the biggest setbacks came when Portuguese construction giant Mota-Engil — a major technical and financial partner — withdrew from the project.

Mota-Engil, which operates in nearly 50 countries, was to provide crucial equity to kick-start the works and attract further financing from banks and local pension funds.

Without a replacement shareholder of similar capacity, the committee ruled the project financially weak. The company, part-owned by the Mota family and China Communications Construction Company Ltd., would have brought not only capital and expertise but also credibility with lenders.

Its departure left Everstrong relying on its parent’s modest capital base and new local partners, including a joint venture with billionaire Peter Munga through Quickpass Limited. Everstrong Capital (Kenya) holds half of Quickpass, with the remainder owned by Munga’s Kiewa Group. Equally problematic was the greenfield plan’s land acquisition bill, estimated at Sh12.9 billion, which in a PPP model would be passed directly to motorists via tolls. Preliminary figures suggested tolls of Sh12–13 per kilometre, or roughly Sh5,280 for a full trip — with higher rates for heavy trucks.

Policy hurdles and gov’t reluctance

Kenya’s troubled history with land speculation on major projects further dampened the plan’s prospects. The standard gauge railway faced Auditor-General queries over Sh1.04 billion in unsupported land compensation, while Mombasa’s Dongo Kundu bypass saw Sh14 billion in alleged inflated valuations. To avoid such pitfalls, the government now prefers a brownfield strategy — expanding the A8 highway within its current reserve.

Everstrong had also sought government policy guarantees, including mandatory use of the road by trucks and long-distance buses — similar to the 2018 directive forcing cargo onto the SGR. The firm argued that 75 percent of toll revenue would depend on heavy truck traffic. But the government resisted, wary of backlash from road transport operators and conflicts with existing freight policy. Requests for tax exemptions were also denied.

With no guarantees or incentives, the committee concluded the project was unviable. The collapse mirrors a similar failure in 2018, when US engineering giant Bechtel’s bid faltered over financing terms. For Washington, it is yet another missed opportunity in East Africa, where China continues to dominate mega infrastructure projects such as the SGR and the Nairobi Expressway.