The Nairobi Expressway has become a defining feature of the city’s skyline, a symbol of modern infrastructure meant to ease congestion and signal Kenya’s readiness for private sector–led infrastructure. Yet, beneath the success of rising traffic lies a financial paradox. In the six months to December 2024, the operator reported a Sh1.8 billion loss, even as the number of vehicles using the road surged. The Chinese operator MOJA Expressway Company would have absorbed deeper losses had it heeded regulatory calls to cut its toll charges following a drop in inflation and strengthening of the shilling against the dollar.

At first glance, that makes little sense. More cars should mean more toll revenue. But the story behind the numbers reveals a different truth, the Expressway’s losses are driven less by weak performance and more by the financing structure and cost of capital behind it.

Traffic Boom, Profit Gloom

The expressway recorded an average of about 67,000 vehicles per day, translating to roughly 12.5 million trips over the half-year period. Toll revenue rose to Sh7.16 billion, marking strong growth compared to earlier years. But the operator’s financial statements still show losses widening from Sh1.2 billion to Sh1.84 billion, despite the surge in use.

It’s a situation that defies basic business intuition: more customers, higher revenues, yet deeper losses. To understand why, we looked beyond toll booths and into the project’s financial and operational structure

                           

The Financing Behind the Road

The Nairobi Expressway was financed, built, and is operated by China Road and Bridge Corporation (CRBC) through a special purpose vehicle, Moja Expressway Company, under a public–private partnership (PPP). CRBC invested an estimated Sh87 billion, expecting to recover the cost through toll revenues during its concession period before handing the road back to the government.

That model, while sound in principle, comes with heavy early-stage costs. The operator must service project debt, handle depreciation on massive capital investment, and fund operations and maintenance. For a project of this scale, these expenses can easily overshadow early revenue inflows, producing accounting losses even when traffic and collections are rising.

Potential Causes of the Losses

The widening losses on the Nairobi Expressway, even amid strong traffic growth, point to a potential deeper financial structure issue rather than weak performance. These could include factors such as:

1. Heavy loan repayments and interest costs: The project’s Sh87 billion capital cost was financed largely through debt. As traffic grows, toll revenue increases but not fast enough to offset the large interest and principal repayments due each year. This means that even though more vehicles are paying, the financing burden continues to outpace revenue growth, widening the net loss.
2. High depreciation and amortization: The expressway’s massive upfront investment leads to high annual depreciation and amortization charges. These accounting expenses remain fixed regardless of traffic volumes, so even when toll collections rise, they still drag down reported profits.
3. Forex fluctuations: Toll rates and debt are both tied to the U.S. dollar. When the shilling strengthens, toll collections converted to dollars decline while dollar-denominated interest payments stay the same. So, despite more users and higher nominal revenues in shillings, the real value of income in dollar terms can shrink, worsening losses.
4. Operational and maintenance costs: Higher usage brings more wear and tear, increasing maintenance, staffing, and system management expenses. The cost of operating the toll plazas and maintaining the elevated structure grows with traffic volume, so expenses rise almost in tandem with revenue, leaving little room for margin improvement.
5. Early-stage ramp-up period: Infrastructure projects typically record losses in their first few years as they work through capital recovery and demand stabilization. The expressway is still within that early payback window, where costs remain high and revenues are still catching up. The more traffic grows, the closer it gets to breakeven, but until then, the high fixed financing and depreciation costs keep net losses rising.
6. Accounting timing differences: Finally, part of the widening loss may be due to non-cash adjustments such as foreign exchange revaluations or depreciation schedules. These do not reflect poor cash performance, but they lower net income on paper, contributing to a reported loss even as operational cash flow strengthens.

Looking Ahead: Lessons for the future

The Expressway will likely turn profitable in the medium term once debt obligations ease and revenues stabilize. For now, the widening losses are a reminder that infrastructure finance is a marathon, not a sprint. Success depends not only on usage but also on how projects are structured, funded, and shielded from macroeconomic shocks.

At InVhestia, we support in designing and testing sustainable financing structures through financial modeling built on the FAST Standard, which emphasizes flexibility, accuracy, structure, and transparency. This approach enables stakeholders to stress-test key assumptions and anticipate potential future scenarios, from traffic growth and exchange rates to operating costs and capital structure, before committing to large investments. With improved financial discipline and data-driven scenario analysis, similar projects can achieve both operational efficiency and long-term financial sustainability.

The Nairobi Expressway has become a defining feature of the city’s skyline — a symbol of modern infrastructure meant to ease congestion and signal Kenya’s readiness for private sector–led infrastructure. Yet, beneath the success of rising traffic lies a financial paradox. In the six months to December 2024, the operator reported a Sh1.8 billion loss, even as the number of vehicles using the road surged. The Chinese operator MOJA Expressway Company would have absorbed deeper losses had it heeded regulatory calls to cut its toll charges following a drop in inflation and strengthening of the shilling against the dollar.

At first glance, that makes little sense. More cars should mean more toll revenue. But the story behind the numbers reveals a different truth, the Expressway’s losses are driven less by weak performance and more by the financing structure and cost of capital behind it.

Traffic Boom, Profit Gloom

The expressway recorded an average of about 67,000 vehicles per day, translating to roughly 12.5 million trips over the half-year period. Toll revenue rose to Sh7.16 billion, marking strong growth compared to earlier years. But the operator’s financial statements still show losses widening from Sh1.2 billion to Sh1.84 billion, despite the surge in use.

It’s a situation that defies basic business intuition — more customers, higher revenues, yet deeper losses. To understand why, we looked beyond toll booths and into the project’s financial and operational structure

The Financing Behind the Road

The Nairobi Expressway was financed, built, and is operated by China Road and Bridge Corporation (CRBC) through a special purpose vehicle, Moja Expressway Company, under a public–private partnership (PPP). CRBC invested an estimated Sh87 billion, expecting to recover the cost through toll revenues during its concession period before handing the road back to the government.

That model, while sound in principle, comes with heavy early-stage costs. The operator must service project debt, handle depreciation on massive capital investment, and fund operations and maintenance. For a project of this scale, these expenses can easily overshadow early revenue inflows, producing accounting losses even when traffic and collections are rising.

Potential Causes of the Losses

The widening losses on the Nairobi Expressway, even amid strong traffic growth, point to a potential deeper financial structure issue rather than weak performance. These could include factors such as:

1. Heavy loan repayments and interest costs: The project’s Sh87 billion capital cost was financed largely through debt. As traffic grows, toll revenue increases but not fast enough to offset the large interest and principal repayments due each year. This means that even though more vehicles are paying, the financing burden continues to outpace revenue growth, widening the net loss.
2. High depreciation and amortization: The expressway’s massive upfront investment leads to high annual depreciation and amortization charges. These accounting expenses remain fixed regardless of traffic volumes, so even when toll collections rise, they still drag down reported profits.
3. Forex fluctuations: Toll rates and debt are both tied to the U.S. dollar. When the shilling strengthens, toll collections converted to dollars decline while dollar-denominated interest payments stay the same. So, despite more users and higher nominal revenues in shillings, the real value of income in dollar terms can shrink, worsening losses.
4. Operational and maintenance costs: Higher usage brings more wear and tear, increasing maintenance, staffing, and system management expenses. The cost of operating the toll plazas and maintaining the elevated structure grows with traffic volume, so expenses rise almost in tandem with revenue, leaving little room for margin improvement.
5. Early-stage ramp-up period: Infrastructure projects typically record losses in their first few years as they work through capital recovery and demand stabilization. The expressway is still within that early payback window, where costs remain high and revenues are still catching up. The more traffic grows, the closer it gets to breakeven, but until then, the high fixed financing and depreciation costs keep net losses rising.
6. Accounting timing differences: Finally, part of the widening loss may be due to non-cash adjustments such as foreign exchange revaluations or depreciation schedules. These do not reflect poor cash performance, but they lower net income on paper, contributing to a reported loss even as operational cash flow strengthens.

Looking Ahead: Lessons for the future

The Expressway will likely turn profitable in the medium term once debt obligations ease and revenues stabilize. For now, the widening losses are a reminder that infrastructure finance is a marathon, not a sprint. Success depends not only on usage but also on how projects are structured, funded, and shielded from macroeconomic shocks.

At InVhestia, we support in designing and testing sustainable financing structures through financial modeling built on the FAST Standard, which emphasizes flexibility, accuracy, structure, and transparency. This approach enables stakeholders to stress-test key assumptions and anticipate potential future scenarios, from traffic growth and exchange rates to operating costs and capital structure, before committing to large investments. With improved financial discipline and data-driven scenario analysis, similar projects can achieve both operational efficiency and long-term financial sustainability.