U.S. Firm Linked To Former Ambassador Targets Kenyan Pension Funds for Nairobi-Mombasa Expressway

In a significant move to fund the ambitious Nairobi-Mombasa Expressway, US infrastructure investment manager Everstrong Capital has initiated a major fundraising effort, targeting local pension funds.

This comes after securing a deal with CPF Capital & Advisory, a key player in managing retirement benefits in Kenya, to assist in raising the necessary funds for the Usahihi Expressway Project.

The 440-kilometer expressway, designed to alleviate congestion between Kenya’s capital and its largest port city, is part of a $3.6 billion (Sh465.12 billion) agreement signed between Everstrong Capital and the Kenya National Highways Authority (KeNHA) in May 2024 during President William Ruto’s state visit to the United States.

“CPF Capital & Advisory will act as a bridge to pension funds, providing a portion of the required capital for the project,” said an official privy to the negotiations. This move leverages the substantial Sh1.97 trillion held in retirement benefits assets as of June 30, 2024, according to data from the Retirement Benefits Authority (RBA).

The Nairobi-Mombasa Expressway, also known as the Usahihi Expressway, aims to reduce the travel time between Nairobi and Mombasa from the current 10.5 hours to approximately 4.5 hours, addressing one of Africa’s most congested routes.

The project has attracted international interest in the past, with companies like the Korean Overseas Infrastructure and Development Corporation (KIND) and Bechtel having shown interest, though previous negotiations fell through over financing models.

Bechtel had proposed a model where the Kenyan government would pay for the road’s construction upfront rather than relying on toll revenues, which was seen as financially burdensome given Kenya’s existing debt pressures. Additionally, Bechtel’s demand for a virgin land corridor posed further challenges due to the high costs associated with land acquisition.

This project is not the only infrastructure initiative facing financing hurdles in Kenya. Previously, a deal for the Nairobi-Nakuru-Mau Summit Toll Road was terminated due to concerns over high service fees demanded by a French consortium over a 13-year period. The Kenyan government decided against incurring further debt to cover these fees, highlighting ongoing fiscal prudence amidst economic constraints.

The involvement of pension funds in the Usahihi Expressway project underscores a strategic shift towards domestic financial resources to fund critical infrastructure, potentially setting a precedent for future public-private partnership (PPP) projects in Kenya. This approach not only mobilizes local capital but also aims to ensure that the financial burden does not fall heavily on the state’s balance sheet, aligning with broader economic sustainability goals.

Everstrong Capital is linked to former U.S. Ambassador Kyle McCarter, who served as the U.S. Ambassador to Kenya from 2019 to 2021 and is now a partner at Everstrong Capital.