Kenya Signs $3.6 Billion Expressway Deal with Everstrong Capital, Boosting Infrastructure Growth

Key Takeaway

• Kenya signed a $3.6 billion deal with Everstrong Capital for a 440-km expressway between Nairobi and Mombasa, posing no financial risk to the government.
• Microsoft and G42 plan a $1 billion geothermal-powered data center in Olkaria, boosting cloud-computing capacity in East Africa.
• Coca-Cola announced a $175 million expansion in Kenya; US International Development Finance Corp. to invest several hundred million dollars more.

$3.6 Billion Expressway Agreement

The Kenya National Highways Authority has signed a $3.6 billion agreement with Everstrong Capital LLC to construct an expressway linking Nairobi and Mombasa, Kenya's two largest cities. This toll-road project, named Usahihi, will span 440 kilometers (273 miles) and feature four to six lanes. The expressway will traverse an expansive wildlife reserve and will operate independently from the Kenyan government's balance sheet, posing no financial risks to the government. The project is expected to be self-sustaining financially.

President William Ruto, during his US visit, emphasized the importance of private investment in Kenya. This visit marks the first state visit by an African leader to Washington in 16 years. The US aims to strengthen its ties with Africa, where competitors like China and Russia have gained significant influence. "The construction of the Usahihi expressway poses no financial risks to the Kenyan government, as it is structured to operate independently from the government of Kenya’s balance sheet and is projected to be financing self-sustaining," according to an emailed statement.

Additional Investment Deals

In addition to the expressway agreement, several other investment deals were announced during President Ruto's US tour. Microsoft Corp. and G42, the United Arab Emirates' leading artificial intelligence firm, plan to build a $1 billion geothermal-powered data center in Kenya. This data center, located in Olkaria, will have an initial capacity of 100 megawatts and is expected to be operational within two years. The full project will eventually require up to one gigawatt of electricity from the grid.

Microsoft President Brad Smith highlighted the significance of this project, stating, "This is the single biggest step to advance the availability of digital technology in, I think, the country’s history." The data center will support Microsoft's Azure products and aims to boost cloud-computing capacity in East Africa. The Kenyan government has agreed to move more of its services to the cloud, which Microsoft hopes will drive overall demand.

Additionally, Coca-Cola Co. announced a $175 million investment to expand its operations in Kenya. The US International Development Finance Corp. is also expected to announce several hundred million dollars in new investments in Kenya, bringing its portfolio in the country to over $1 billion.

Historical Context and Future Prospects

Kenya has previously engaged in similar infrastructure projects. In 2017, a $3.5 billion expressway project with Bechtel Corp. was dropped as the company preferred to be a contractor rather than building and operating the highway. State-backed Korea Overseas Infrastructure & Urban Development Corp. also conducted feasibility studies for a highway that would have cost approximately $1.5 billion.

President Ruto's visit to the US also includes advocating for the renewal of the African Growth and Opportunity Act (AGOA), a trade program that provides duty-free access to the US market for about 40 sub-Saharan nations. The current iteration of AGOA is set to expire in 2025.