Stanbic Bank Kenya partners with Mota-Engil Africa to improve Kenya’s national road network
Stanbic Bank Kenya was appointed as the sole lender of a $87 million project finance facility denominated in Kenyan shillings to Mota-Engil Africa to support Kenya’s Road Annuity Programme, which aims to improve the country’s infrastructure and national road network.
The Road Annuity Programme was set up by the Kenyan National Treasury through the establishment of a dedicated Road Annuity Fund that is funded predominantly by fuel levies. Through this initiative, the Kenyan government aims to upgrade 10 000 kilometres of the country’s road network and attract up to $2.8 billion in private investment.
Mota-Engil is a global multi-national company with a reputation for delivering its projects on budget on time and to specification. The company’s vision is to be considered an international reference in the Engineering and Construction sectors and be recognised for its efforts in innovation, technical skills and service excellence.
Mota-Engil partnered with Lee Construction Ltd, which is a Kenyan construction company that has been involved in a variety of development projects in Kenya. The construction of the road lots by Mota-Engil and Lee Construction Ltd commenced in Q1 2022 and is intended to last for a 24-month period.
The two concessions awarded to Mota-Engil under the programme cover improvements to Lot 15 in central Kenya and Lot 18 in Western Kenya. The project will consist of a total of 16 roads, 10 in lot 15 and 6 in lot 18. Approximately 44.9 kilometres of roads in Lot 15 and 35.1 kilometres in Lot 18 will be upgraded from gravel to asphalt standards, benefitting residents of 10 counties in Kenya. This initiative is aligned with the low-carbon and climate-resilient development path for Kenya.
Stanbic Bank Kenya has a long-standing relationship with Mota-Engil and has provided the company with various solutions while advising them in their capacity as equity investors, contractors and operators over the past 7 years. In addition to being the sole lender, the bank is also agent for the facility, the currency hedge provider and guarantee provider to the contracting authority.
Proper infrastructure is a critical component to the economic success of a country, and the Kenyan government has committed to developing and maintaining the country’s rural and urban access roads in order to drive much needed economic growth. Prioritising infrastructure development is one of the main agendas in Kenya’s Vision 2030 economic blueprint.
The improvement of these roads is expected to stimulate trade and create a wealth of opportunities for Kenyan citizens, from opening up new markets for farmers to giving Kenyans better access to nearby towns. These developments are also expected to lower the cost of transport, generate local jobs and provide a much safer environment for local Kenyan communities. These upgrades will also reduce vehicle operating costs, given the improvement in road quality and greater fuel efficiency, as well as contribute to flood resilience as a result of improved road drainage.
Infrastructure development will also strengthen Kenya’s economic position in the Eastern Africa region and cement the country’s position as a leading service and commercial hub.