Report: Kenya loses Sh600b annually to graft in mega projects

Kenya has lost more than Sh600 billion to stalled and mismanaged public infrastructure projects, according to a Transparency International Kenya (TI-Kenya) report.

The report, Corruption Risk Assessment of Infrastructure Projects in Kenya, paints a picture of systemic weaknesses where political patronage, weak oversight, foreign contractor dominance and compromised institutions are draining public resources.

It assessed three flagship projects using the Infrastructure Corruption Risk Assessment Tool (ICRAT) and found that the larger the project, the higher the corruption risk and the greater the burden on taxpayers. The projects examined were the Standard Gauge Railway (SGR) and Affordable Housing projects in Vihiga and Kiambu.

TI-Kenya Executive Director Sheila Masinde said the infrastructure sector was prioritised because it consumes up to 80 per cent of the national budget. “The infrastructure sector is one of the most important sectors, and that is why we have taken a keen interest to ensure full accountability,” she said.

Masinde noted major loopholes in procurement processes, including bidding, contractor selection, financing models and weak public participation.

Among the projects reviewed, the SGR recorded the highest corruption risk score at 4.49 out of 5, classified as very high.

The railway, initially designed under Vision 2030 to connect Mombasa to Nairobi and onward to Uganda, ends at Suswa in Narok County, about 468 kilometres short of its intended destination. The report says the truncated line undermined its intended economic impact, while taxpayers continue to shoulder heavy financial costs linked to the project.

Phase 1 cost Sh490.92 billion, with about 90 per cent financed through Chinese loans. Phase 2A to Naivasha added a further Sh193.78 billion.

The report notes that the original loan of Sh539 billion has grown to Sh737.5 billion due to accumulated interest from non-repayment.

Kenya now spends nearly Sh1 billion per month to operate the railway, excluding debt servicing, and over Sh129 billion annually to service Chinese debt obligations. In the 2025/26 financial year, the country is also expected to pay Sh5.3 billion in penalties for missed payments to China Exim Bank, which the Auditor General has previously flagged as improper expenditure.

The report further describes the SGR as an investor-driven project developed largely outside normal public oversight structures. It also highlights restrictive contractual clauses that limit government disclosure without approval from Chinese partners.

According to TI-Kenya, China Road and Bridge Corporation (CRBC) not only built the railway, but also conducted feasibility studies, supplied rolling stock, and participated in operating arrangements. The company also benefited from tax exemptions on imported equipment and provisions allowing contract adjustments.

It also notes that contracts were concluded within a very short period, while public participation in environmental and social impact assessments was minimal, leaving limited room for meaningful stakeholder input.

On affordable housing, the report reviewed the Kiambu Civil Servants Housing Scheme and the Vihiga County Affordable Housing Project, classifying both as moderately high risk.

The Kiambu project, launched under the Big Four Agenda, was meant to deliver 193 housing units through tenant purchase and mortgage arrangements. However, it was affected by procurement conflicts of interest, planning challenges, and gaps between budget allocations and actual expenditure.

Despite a structured policy framework, bureaucratic delays and limited private sector participation hindered its success in addressing housing shortages.

Under the current Affordable Housing Programme, 1.5 per cent of salaried employees’ gross pay is matched by employers to fund construction, with the government targeting 250,000 housing units annually.

However, in Vihiga County, where 220 units are under construction, TI-Kenya found missing documentation, including environmental impact assessments, feasibility studies and bills of quantities. The report says this makes it difficult to verify the Sh536 million budget allocation.

TI-Kenya argues that weak oversight, limited competitive bidding and minimal stakeholder consultation increase corruption risks in the programme.

Caroline Maina of TI-Kenya said the projects were selected due to their high public interest and high cost across different administrations.

The report also identifies five key pressure points in infrastructure governance, including weak whistle-blower protection, procurement gaps, political patronage, restricted access to information, and poor accountability mechanisms.

Masinde noted that formal information requests submitted to several agencies, including the National Treasury, NEMA, the Controller of Budget, Kenya Railways Corporation and the Office of the Auditor General, had not received substantive responses by March 2026.