Gov’t mulls securitisation of HELB, Hustler Fund, road maintenance levy to spur growth

The National Treasury has defended the securitisation of the road maintenance levy as a way of guaranteeing that ongoing road construction works are completed.

According to the Treasury Principal Secretary Dr. Chris Kiptoo, this will see upto 50 percent of the collection from the road maintenance levy channeled toward the securitisation.

As the fiscal space for the government tightens, the Treasury has been forced to come up with new ways of ensuring that the government engine is well oiled, and with debt becoming less of an option, the Treasury has turned to securitisation.

An arrangement where “future revenue streams are sold to investors to raise money now,” allowing the government to meet its immediate fiscal need at the expense of future needs.

According to PS Kiptoo, besides the securitisation of the road maintenance levy, which will see upto half of the collection used as payment, the government is also considering the securitisation of HELB payment, Hustler Fund payment, as well as the Youth and Women Enterprise Fund.

“For the government of Kenya to reduce its debt burden and realise its development agenda, given the constraints, it will need to have solutions that will help it raise capital. National Treasury, the Central Bank of Kenya, and the Capital Market Authority are expected to innovate some market-based mechanisms and create instrument that will see it borrow from the diaspora community by securitizing future cash inflows,” said Kiptoo.

The PS, who was appearing before the debt and privatization committee, also noted that the National Treasury is set to implement the single Treasury account following the approval by the Cabinet.

This, he argues, will reform the public finance management by ensuring accountability and transparency in the use of public resources, as well as reduce borrowing cost.

“The National Treasury has started to guide the transition towards a single Treasury account. The single Treasury account will be implemented currently in three clusters beginning 2025/25. Cluster 1 will involve ministry departments and agencies, 2 will have county government entities, 3 will have SAGAs and State corporations,

And although Treasury has listed new funds set for consideration for securitisation, details remain scanty on what projects will be funded from the resources raised.