Report On Consideration Of The Miscellaneous Fees And Levies (amendment) Bill (national Assembly Bill No. 57 Of 2025)

REPUBLICOFKENYA THENATIONALASSEMBLY

THIRTEENTHPARLIAMENT-FIFTHSESSION-2026

DEPARTMENTALCOMMITTEEONTRANSPORTANDINFRASTRUCTURE

REPORT ON:

THECONSIDERATIONOFTHEMISCELLANEOUSFEESANDLEVIES (AMENDMENT)BILL(NATIONALASSEMBLYBILLNO.57OF2025)

THENATIONALASSEMBLY PAPERSLAID

DAY.

DATE:

0 3 MAR 2026

TUESDA

Directorate of Departmental CommittesED

Clerk'sChambers Parliament Buildings NAIROBI

CLERK.AT HE-TABLE:

hm

OBIERO

MARCH,2026

TABLE OFCONTENTS

| LISTOFABBREVIATIONS | LISTOFABBREVIATIONS | 3 | |----------------------------------------------|-------------------------------------------------------------------|-----| | LISTOFANNEXURES | LISTOFANNEXURES | 4 | | 1.0PREFACE | 1.0PREFACE | 6 | | 1.1 | Introductionand CommitteeMandate | | | 1.2 | Committee Subjects and Oversight | | | 1.3 | Committee Membership | 8 | | 1.4 | Secretariat | 9 | | CHAPTERTWO | CHAPTERTWO | 10 | | 2.0BACKGROUND | 2.0BACKGROUND | 10 | | 2.1 | Introduction | 10 | | 2.2 | Analysisof the Bill | 10 | | 2.3 | Situational Analysis | II | | CHAPTERTHREE | CHAPTERTHREE | 16 | | 3.0PUBLICPARTICIPATION/STAKEHOLDERENGAGEMENT | 3.0PUBLICPARTICIPATION/STAKEHOLDERENGAGEMENT | 16 | | 3.1 | SubmissionbytheMinistryofRoadsandTransport | 16 | | 3.2 | Submission by theKenya International Freight&WarehouseAssociation | 20 | | 3.3 | SubmissionbytheShippersCouncil of EasternAfrica | 25 | | CHAPTERFOUR | CHAPTERFOUR | 29 | | 4.0COMMITTEEOBSERVATIONS | 4.0COMMITTEEOBSERVATIONS | 29 | | CHAPTERFIVE | CHAPTERFIVE | 30 | | 5.0COMMITTEERECOMMENDATION | 5.0COMMITTEERECOMMENDATION | 30 | | CHAPTERSIX | CHAPTERSIX | 31 | | 6.0SCHEDULEOFAMENDMENTS | 6.0SCHEDULEOFAMENDMENTS | 31 |

6

7

LISTOFABBREVIATIONS

``` CAP - Chapter (of the Laws of Kenya) CS - Cabinet Secretary DRC - Democratic Republic of Congo ICD - Inland Container Depot ICPAK- Institute of Certified Public Accountants of Kenya IDF - Import Declaration Fee KAM-KenyaAssociationofManufacturers KEBS-KenyaBureauofStandards KEPHiS-KenyaPlantHealthInspectorateService KIFWA-Kenya International Freight&WarehouseAssociation KR - Kenya Railways KRC - Kenya Railways Corporation KRA - Kenya Revenue Authority MGR - Meter Gauge Railway PFMA - Public Finance Management Act PPP - Public-Private Partnership RDL - Railway Development Levy RDLF - Railway Development Levy Fund RTI - Railway Training Institute SCEA-ShippersCouncilofEasternAfrica SGR - Standard Gauge Railway ```

LISTOFANNEXURES

• Annexure I: Signed list of Members who attended the sitting that considered and adopted the report
• Annexure 2: Minutes of the Committee on sittings to consider the Bill and adoption of the report
• Annexure 3: Copy of the Miscellaneous Fees and Levies(Amendment) Bill (National Assembly Bill No.57 of 2025)
• Annexure 4: Correspondence to stakeholders requesting for submissions on the Bill;
• Annexure 5: Newspaper advertisement inviting the public to submit memoranda on the Bill.
• Annexure 6:WrittensubmissionsfromStakeholders.

CHAIRPERSON'SFOREWORD

The Miscellaneous Fees and Levies (Amendment)Bill(National Assembly Bill No.57of 2025) Committee on Transport and Infrastructure for consideration and reporting to the House pursuanttotheNational AssemblyStandingOrderI27(1).

While conducting public participation, the Committee placed advertisements in the print media on 13th February, 2026, seeking comments from the public on the Bill pursuant to the provisions ofArticleIl8 of theConstitution andStanding Order127(3).The Committee also invited relevant stakeholders, namely the Ministry of Roads and Transport, the Kenya Revenue Authority,the Shippers Council of Eastern Africa,the Kenya International Freight and Warehouse Association, and the Kenya Transporters Association.

The Committee is grateful to the Offices of the Speaker and the Clerk of the National Assembly for the logistical and technical support accorded to it during the consideration of the Bill. I wish to express my appreciation to the Committee Members and the Committee Secretariatfor theirresilienceanddevotiontoduty,whichmadetheconsiderationoftheBill successful.Finally,IwishtoexpressgratitudetotheMembersof thepublicwhosubmittedtheir views andcomments ontheBill inthecourseofpublicparticipation.Theirviewsandcomments indeedwerevitalintheconsiderationoftheBill.

On behalf of the Committee and pursuant to the provisions of Standing Order I99 (6), it is my pleasantprivilege and honor topresent to this House thereportof theCommittee on its consideration of the Miscellaneous Fees and Levies (Amendment) Bill (National Assembly Bill No. 57 of 2025).

The Committee has considered the Bill and recommends that the House approves the Miscellaneous Fees and Levies (Amendment) Bill (National Assembly Bill No. 57 of 2025) with amendments.

HON.GKGEORGEKARIUKI,CBS,MP CHAIRPERSON

1.0PREFACE

1.1 IntroductionandCommitteeMandate

• NationalAssembly StandingOrdersNo.2l6(1).Thefunctionsandmandateof the Committee as per Standing Orders, No. 216(5) include: -
• a) To investigate, inquire into, and report on all matters relating to the mandate, management, activities, administration, operations and estimates of the assigned ministries and departments;
• b) To study the programme and policy objectives of Ministries and departments and the effectivenessoftheirimplementation;
• c)Tostudyandreviewall thelegislationreferred toit;
• d)To study,access and analyse therelative successof theMinistries anddepartments as measured by the results obtained as compared with their stated objectives;
• e)To investigate and inquire into all matters relating to the assigned Ministries and departments as they may deem necessary, and as may be referred to them by the House;
• f) To vet and report on all appointments where the Constitution or any law requires the National Assembly to approve, except those under Standing Order No.204 (Committee on appointments);
• g) To make reports and recommendations to the House as often as possible, including recommendationofproposedlegislation;
• h)ToconsiderreportsofCommissionsand IndependentOfficessubmitted totheHouse pursuant to the provisions of Article 254 of the Constitution; and
• i) To examine any questions raised by Members on a matter within its mandate.
• j)Toexaminetreaties,agreements andconventions;
• 2.The subjectmatterof theDepartmentalCommitteeonTransport andInfrastructureare stated in the Second Schedule of the National Assembly Standing Orders as follows: Transport, including non- motorized transport and maintenance of Roads, rails, air and marine transport,seaports andnational integrated infrastructure policies andprogrammes and transport safety.

CHAPTERI

I.2-Committee Subjects and Oversight

• 3.The Committee is mandated to consider the following subjects as per the Second Schedule of theStandingOrders:
• (i) Transport, including non-motorized transport;
• (ii) Construction andmaintenance ofroads;
• (ii) Rails, air and marine transport; Seaports and national integrated infrastructure
• (iv) policies and
• (v) programmes; and
• (vi) Transport safety.
• 4.The Committee oversights the Ministry of Roads and Transport which has three (3) State Departments namely:
• i) TheStateDepartmentforRoads;
• i) The State Department for Transport; and
• ii)TheStateDepartmentforAviationandAerospaceDevelopment.

5. Further, Committee oversights the State Department for Shipping and Maritime Affairs which isundertheMinistry of Mining,BlueEconomy,and MaritimeAffairs.

1.3 Committee Membership

6.The Committee comprises the following Members:

The Hon.G.K.George Kariuki,CBS,M.P-Chairperson Ndia Constituency

UnitedDemocraticAllianceParty

TheHon.Mutua DidmusWekesa Barasa,M.P-Vice-Chairperson Kimilili Constituency

United Democratic Alliance Party

The Hon.Arama Samuel.M.P Nakuru TownWest Constituency Jubilee Party

The Hon.Abdul Rahim Dawood, M.P. North Imenti Constituency

Independent

The Hon. Naicca, Johnson Manya, CBS, M.P MumiasWest Constituency

Orange DemocraticMovementParty

The Hon.Elsie Muhanda,M.P.

Kakamega County

OrangeDemocraticMovementParty

The Hon. Francis, Kajwang' Tom Joseph, CBS, MP Ruaraka Constituency

OrangeDemocraticMovementParty

The Hon. Chege John Kiragu, M.P. Limuru Constituency

UnitedDemocraticAllianceParty

The Hon. Kiaraho, David Njuguna, M.P. Ol Kalao Constituency Jubilee Party The Hon.Kiunjuri Festus Mwangi,M.P.

Laikipia East Constituency The Service Party

The Hon. Bady, Bady Twalib, M.P. Jomvu Constituency

OrangeDemocraticMovementParty

The Hon.Abdirahman,Husseinweytan Mohamed, M.P. Mandera East Constituency

OrangeDemocraticMovementParty

The Hon. Komingoi Kibet Kirui, M.P. Bureti Constituency

UnitedDemocraticAllianceParty

The Hon.Saney Ibrahim Abdi, M.P Wajir North Constituency

United DemocraticAlliance Party

The Hon. Jhanda Zaheer, M.P Nyaribari Chache Constituency

UnitedDemocraticAlliance

1.4 Secretariat

7.The following Members of Staff service the Committee:

HeadofSecretariat Ms.TracyChebetKoskei Principal ClerkAssistantIl

Mr.Mohamednur M.Abdullahi

Mr. Binensa Mabungu

Clerk Assistant

ClerkAssistant

Mr. Abdinasir Y. Moge

Mr.Erick Kariuki

Fiscal Analyst

Research Officer

Ms.Faith Makena

Ms.Patricia Gichane

Serjeant-at-Arms II

Legal Counsel

Ms. Rinha Saineye

Ms. Rehema Koech Audio Officer

MediaRelationsOfficer

2.0 BACKGROUND

2.1Introduction

• 8.The Miscellaneous Fees and Levies (Amendment) Bill, 2025, is sponsored by the Hon. Kimani Ichungwah, Member of Parliament and Leader of the Majority Party. The principal object of the Bill is to amend the Miscellaneous Fees and Levies Act Cap.469C to expand the purpose of the 2% railway development levy provided for in section 8 of the Act.
• 9.The Bill seeks to vest the Railway Development Levy Fund with the established Railway Development Levy Fund Board. The Bill seeks to shift the administration of the Fund from the Cabinet Secretary for matters relating to finance to the Railway Development Levy Board and mandate the Board to allocate resources from the fund not exceeding 90% to secure additional funds for financing development and construction or railway transport infrastructure,for safety and economic regulation of railway infrastructure and on the approval of both Cabinet Secretary for Finance and Transport to finance rehabilitation of railway transport infrastructure.

2.2 Analysis of the Bill

• 10.The Bill contains three (3) Clauses for consideration:
• Il.ClauseIprovidesfor the short title
• 12.Clause2seekstoamendSection3thatprovidesforthefunctionsandpowersoftheKRA Commissioner- General in particular the clause amends section 3 (l) by inserting the expression "unless otherwise provided for" the effect of which is to provide an exception to the control and collectionofdutiesorleviesundertheActbytheCommissionerGeneral.

The Commissioner(unless otherwise provided for) shall be responsible for the control and collection of, and accounting for,duties,fees and levies paid under this Act and shall, subject to the direction and controloftheCabinetSecretary,havethesuperintendenceofallmattersrelatingthereto.

• 13.Clause 3 seeks to amend Section 8 of the Act by deleting and substituting subsection (3). The new subsection (3) expands the scope or purpose of the Railway Development Levy from simply the constructionandoperationoftheStandardGaugeRailwaytothreenewpurposes:
• i.financing the development and construction of the railway transport infrastructure;
• ii.the safety and economic regulation of the railway infrastructure;
• ili.therehabilitationoftherailwayinfrastructure(thispurposeissubjecttoapprovalofboth CabinetSecretaryFinance and Transport).

CHAPTERTWO

• I4.Clause 3 also seeks to amend Section 8 by deleting and substituting subsection(4). The new subsection (4) seeks to establish the Railway Development Levy Fund, into which the proceeds of the Railway Development Levy shall be paid, and vests the Railway Development Levy Fund in the Board. It also seeks to amend section 8 by introducing new subsections 4A-4l.
• I5.Sub clause 4A establishes the Railway Development Levy Fund Board and sets out its features as a bodycorporatewithperpetual successionand acommonseal.
• thePresident(from amongst thosenominated by the Cabinet Secretary National Treasury),the other members nominated by the Cabinet Secretary Transport who are non-public officers with to theBoard,
• 17.Subclause4Cseekstoprovidefor thepoweroftheCabinetSecretarytomakeregulationson the recruitment and appointment of the Secretary to the Board and the staff of the Board, the management and administration of the Railway Development Levy Fund and the use and apportionment of the monies in theFund.
• 18.Subclause 4D seeks toprovide that the regulations made under sub clause 4C are created under thePublicFinanceManagementActsection24.
• 19.Sub clause 4E seeks to provide for a proportion not exceeding 90% of the fund may be used to secure additional funds for the purposes of sub clause (3) (a) of the Bill
• 20.Subclause4Fseekstoprovidefor the administrationcosts of theFund thatshall not exceed0.5% oftheFund.
• 21.Subclause 4G seeks to establish three main accounts for monies accruing to the fund, they include, the Fund Account, the General Account for ordinary purposes of the Fund and the Special Account for the additional funds secured pursuant to sub clause (4E).
• ActCap412AandPublicAuditActCap.412B.
• Transport, and Cabinet Secretary, Finance, on the inflows, outflows, and balances of the accounts established under Subclause (4G).

2.3Situational Analysis

i)Miscellaneous Fees and Levies Act, CAP 469C

• 24.The MiscellaneousFees and Levies Act, CAP 469C was assented toon31 August 20l6 and has been amended several times. The Act provides for the imposition of duties, fees and levies on imported or exported goods and for connected purposes.
• 25.Section 8 of the Miscellaneous Fees and Levies Act provides for Railway development Levy. Specifically,section8statesthat;
• i. There shall be paid a levy to be known as the railway development levy, on all goods imported into the country for home use;
• ii.Thelevy shallbe at therate of twopercentof the customsvalue of thegoods andshall be paid by the importer of such goods at the time of entering the goods into the country forhomeuse;
• ii.The purpose of the levy shall be to provide funds for the construction and operation of
• iv. The Cabinet Secretary shall, by regulations, establish a railway development levy fund into which all the proceeds of the levy shall be paid; and
• v.The fund referred to in subsection(4) shall be established,managed,administered or wound up in accordance with section 24 of the Public Finance Management Act (Cap. 412A) and theregulationsmadeunderthatAct.
• 26.On interpretation of terms, The Miscellaneous Fees and Levies Act, provides that:Cabinet

i)Customs and Excise (Railway Development Levy Fund) Regulations. 2013

• 27.The Customs and Excise (Railway Development Levy Fund) Regulations, 2013, commenced on 5 July 20l3. The objective and purpose of the Fund shall be to provide funds for the construction and
• 28.TheFund consistof;
• i.the proceeds of the railway development levy charged under section 8 of the Miscellaneous FeesandLeviesAct,2016;
• ii.grantsor donationsmade to theFund; and
• ii.any income generated from the proceeds of the Fund.
• 29.The regulations provide for an Advisory Committee that consists of:
• i. the Principal Secretary responsible for matters relating to finance who shall be the chairperson;

• ii.thePrincipal Secretary responsible for matters relatingto transport;
• ili. the Principal Secretary responsible for matters relating to infrastructure; and
• iv.themanagingdirector of theKenyaRailwaysCorporation.

31.ThefunctionsoftheAdvisoryCommitteeshallbe-

• i.to review and approve the annual work programmes and cost estimates; and
• i. to oversee the management of the Fund and advise the Cabinet Secretary generally on the operationsoftheFund

32. The following table depicts the amounts received as proceeds of the railway development levy by thestatedepartmentforTransportfromtheKenya RevenueAuthoritywhich is the appointed collectoroftherevenue

| Year | Amount | |--------|----------------| | 2023 | 39,896,226,652 | | 2022 | 35,632,564,903 | | 2021 | 24,055,500,825 |

Source:Reportof theAuditorGeneral

KenyaRailwaysNetworkOverview

• 33.Kenya Railways (KR) develops an integrated rail network and provides rail/inland waterways services under the Kenya Railways Act of 1978 (Cap 397). The objective is to stimulate economic development in the region by increasing efficiency and lowering the cost of transporting cargo betweenmajorportson the IndianOceancoast and hinterland currentnetworks
• Standard Gauge Railway (SGR): Phase I (Mombasa-Nairobi, 472 km, started 2014); Phase 2A (Nairobi-Naivasha, 120 km, 2017). Expanded ICDs at Embakasi (Nairobi) and Mai Mahiu (Naivasha).

• i.Meter Gauge Railway (MGR): 2,066 km total (mainline Mombasa-Malaba: I,082 km; 7 branches).

| Seven branches of Meter Gauge Railway | Seven branches of Meter Gauge Railway | Seven branches of Meter Gauge Railway | |-----------------------------------------|-----------------------------------------|-----------------------------------------| | Branch Line | DistanceinKms | Status | | Nakuru-Kisumu | 216.7 | Operational | | Thika- Nanyuki | 177 | Operational | | Konza - Magadi | 146.3 | Operational (Leased) | | Kisumu-Butere | 69 | Rehabilitated | | Leseru-Kitale | 64.9 | Rehabilitated | | Gilgil - Nyahururu | 76.8 | Rehabilitated | | Voi-Taveta | 118.6 | Not operational |

| Financial Performance of KRC 2017 to 2023(Kshs Millions) | Financial Performance of KRC 2017 to 2023(Kshs Millions) | Financial Performance of KRC 2017 to 2023(Kshs Millions) | Financial Performance of KRC 2017 to 2023(Kshs Millions) | Financial Performance of KRC 2017 to 2023(Kshs Millions) | Financial Performance of KRC 2017 to 2023(Kshs Millions) | Financial Performance of KRC 2017 to 2023(Kshs Millions) | |------------------------------------------------------------|------------------------------------------------------------|------------------------------------------------------------|------------------------------------------------------------|------------------------------------------------------------|------------------------------------------------------------|------------------------------------------------------------| | Revenue Streams | | 2017/182018/19 | 2019/20 | 2020/21 | 2021/22 | 2022/23 | | SGR | 4,344 | 10,291 | 12,079 | 13,579 | 15,018 | 18,202 | | MGR | 63 | 1,383 | 1,073 | 1,458 | 1,477 | 2,368 | | Railway training Institute (RTI) | 206 | 280 | 180 | 214 | 337 | 436 | | Non-Rail Business | 1,132 | 1,137 | 1,254 | 1,411 | 875 | 1,243 | | Total | 5,745 | 13,091 | 14,586 | 16,662 | 17,707 | 22,248 |

StrategicExpansionPlan(KRStrategicPlan2023/24-2027/28)

• i. Extend SGR: Naivasha-Kisumu (Phase 2B, 269 km); Kisumu-Malaba (Phase 2C, 107 km).

• ii.Scope Lamu-lsiolo-Moyale/Nakodok(LAPSSET corridor)
• ili.To increase the rail market share of Port throughput from 26% in 2022 to 42% by 2027.

CHAPTERTHREE

3.0PUBLICPARTICIPATION/STAKEHOLDERENGAGEMENT

• 30.To undertake public participation in the Constitution and Standard Orders, an Advertisement inviting the public to submit memoranda on the Bill was published in the newspaper on I3th February2026.TheCommitteealsoinvitedcommentsontheBillfromrelevantstakeholders namely; the Ministry of Roads and Transport vide a letter Ref: NA/DDC/T&l/20261009 dated 18ch February 2026, the Kenya Revenue Authority vide a letter Ref: NA/DDC/T&l/2026/008 dated 18th I8th February 2026, the Kenya International Freight and Warehouse Association and the Shippers CouncilofEasternAfricavidealetterRef:NA/DDC/T&l/2026/010dated18thFebruary2026.
• 31.The Committee received submissionsfrom thefollowing stakeholders:
• a)The Ministry of Roads and Transport;
• b) )The Kenya International Freight and Warehouse Association; and
• TheShippersCouncilofEasternAfrica
• 32.Thesubmissionsofthestakeholdersareoutlinedbelow:

3.1 Submission by the Ministry of Roads and Transport

appearedbefore theCommitteeonThursday,26rFebruary2026 and submitted asfollows;

• 33.The Railway Development Levy (RDL) was first imposed through Section I17A of the Customs and
• 34.Pursuant to the repealed provision which imposed the RDL, the Cabinet Secretary for the National Treasury issued the Customs and Excise (Railway Development Levy Fund) Regulations, 2013 to establish the RDLF. These Regulations were issued in accordance with Section 24(4) of the Public Finance Management Act, Cap. 4I2A, and as a result, the RDLF was vested in the National Treasury, rather than being vested in an entity with separate legal personality as is the case with similar funds such as the Road Maintenance Levy Fund, which is vested in the Kenya Roads Board.
• that Section II7A of the Customs and Excise Act shall continue to apply until the RDL is provided for in other legislation.This occurred in 2019 when the Miscellaneous Fees and Levies Act,Cap. 469C was amended by the Finance Act to insert Section 8 which is currently in force, and which imposes the RDL. Therefore, Section I17A of the Customs and Excise Act ceased to apply.
• 36.The 20l3 Regulations issued under the Customs and Excise Act were also preserved by Section 46(5) of the Excise Duty Act which provides that the 2013 Regulations would remain valid until

subsidiary legislation with respect to the same matter is made under the Excise Duty Act. No such subsidiarylegislationhasbeenmade under theExcise DutyAct.Whilemaking amendments to expand the scope of the RDLF, the Cabinet Secretary for the National Treasury issued the Customs and Excise (Railway Development Fund) (Amendment) Regulations, 2020, through Legal Notice No. 86. However, these 2020 Regulations were issued under the Miscellaneous Fees and LeviesActrather than undertheExciseDutyAct.

37.Thestateofaffairsisthereforeasfollows:

• i.The RDL is imposed under the Miscellaneous Fees and Levies Act;
• i.The RDLF, which houses the RDL,is established under the 2013 Regulations which were issued under the Customs and Excise Act and preserved by the Excise Duty Act; and
• r issuedundertheMiscellaneousFees and LeviesAct,rather thanunder theExciseDutyAct asprovidedforinSection46(5)ofthesameAct.
• 38.The Cabinet Secretary stated that the Ministry is therefore of the view that it is necessary to harmonize the legal framework governing the RDLF and remove any ambiguities that may exist. In integration.
• 39.TheCabinetSecretaryinformed theCommittee that the amendmentsproposedunder theBill are intended to support the Government's objective of mobilising large-scale, long-tenor capital for the Railway Development Levy (RDL). The key policy intent is to ensure the RDL is governed Fund is applied to secure additional funding, while maintaining robust public finance safeguards.

(i) Why the Government is Pursuing Securitization as an innovative Funding Model

• 40.The Cabinet Secretary stated that Railway transport infrastructure requires large upfront capital investment. Conventional public financing methods (annual budget allocations) are often insufficient for mega infrastructure, and sovereign borrowing may be constrained by fiscal headroom, competing priorities and debt management considerations.
• 41.Further, the Cabinet Secretary informed the Committee that Securitization is an innovative funding approach because it enables the Government to raise substantial upfront financing by leveraging predictable future cash flows (in this case, the railway development levy collections) without

and that there is accountability in the management of funds.

• 42.The Bill is therefore designed to ensure that the levy framework is not merely a collection mechanism, but also a legally bankable framework that can support additional funding to accelerate railway infrastructure development.

(ii)PolicyJustificationfortheProposedAmendments

a)Expansionof thePurposeoftheLevy

• 43.The current law limits the levy purpose to the construction and operation of the Standard Gauge Railway network. The Bill expands the purpose of the levy to cover broader railway transport infrastructure needs, including financing the development and construction of railway transport infrastructure, safety and economic regulation of railway infrastructure and (upon approvals) rehabilitation of railway transport infrastructure.
• 44.Policy rationale: A modern railway system requires investment beyond a single segment of SGR ecosystemrequiredfor afunctional network.

b) Establishment of the Railway Development Levy Fund in Primary Legislation

• 45.The Bill establishes the Railway Development Levy Fund in the Act and provides that the proceeds of the levy shall bepaid into thatFund.
• 46.Policy rationale: Placing the Fund squarely in primary legislation strengthens clarity and certainty over the custody of levy proceeds and ensures the Fund is anchored in a stable statutory framework.

c) Establishment of the Railway Development Levy Fund Board as a Statutory Body Corporate

• 47.A central policy rationale of the amendments is to create a separate statutory entity - the Railway Development Levy Fund Board - capable of holding assets, entering contracts and performing functions necessary for management of the Fund.
• enterintocontracts.
• 49.Policyrationale:For a transaction thatinvolves applying aportionof thelevyproceeds tosecure transparent execution of transaction documentation and facilitates enforceability for financiers and theGovernment alike.

d)GovernanceandBoard Composition

• 50.The Bill sets out the Board composition, including representation from the Principal Secretaries responsible for railway transport and finance, the Attorney-General, and independent members
• 51.Policy rationale: The composition blends sector leadership and public finance oversight with specialized professional competence relevant to structured infrastructure financing.

(ii) How the Amendments Legally Enable the Success of the Transaction

a) Regulations under the PFMA to operationalise the Fund and Board

• 52.The Bill mandates the Cabinet Secretary to make regulations on recruitment, management and regulations shallbemadeunder andinaccordancewithsection24of thePublicFinance ManagementAct.
• 53.This ensures the operational framework (including approvals, accounting, and controls) is anchored in thePFMAregime-critical for credibility and compliance.

b) Power to use a proportion of the Fund to secure additional funding (90% cap)

• 54.The Bill provides that a proportion of the Fund not exceeding ninety per cent (90%) may be applied tosecureadditionalfundingforrailway transport infrastructure.
• protection within the statute by ensuring that a residual balance remains available in the Fund to support the Fund's other lawful functions, including ongoing programme commitments, planned contingencies that may arise in the ordinary course of implementing railway infrastructure mandates.
• 56.ln this respect, the cap ensures the Fund can support resource mobilisation while retaining an

c) Administrative Cost Ceiling (0.5%)

57.The Bill caps administrative costs of the Fund at 0.5%.

• 58.This protects the integrity of levy proceeds by ensuring that the Fund remains primarily dedicated to infrastructure outcomes and financing obligations, rather than overheads.

d)Segregation ofAccounts:Fund Account,General Account,Special Account

• 59.The Bill requires establishment of accounts by the Board (with approval of the Cabinet Secretary), additionalfundssecuredpursuantto theset-asidepower.
• 60.A separate special account is essential to ensure the additional funds raised are traceable,properly controlled, and managed distinctly from ordinaryFund flows.
• s
• 6l.All special account transactions must be recorded, reported and audited in accordance with the PFMA, the Public Audit Act and other written laws. The Board is also required to submit quarterly reports detailing inflows, outflows andbalances of the accounts.
• 62.These controls address governance expectations and ensure the additional funds raised and applied through the Fund are subject to continuous oversight and accountability - supporting investor confidence andpublicfinance integrity.
• 63.ln concluding his submission, the Cabinet Secretary stated that the amendments are designed to provide a legally robust framework that supports innovative resource mobilisation through the use finance safeguards.The Bill thereforeprovides a coherent statutorybasis for accelerating railway

3.2 Submission by the Kenya International Freight & Warehouse Association

• 64.The Kenya International Freight and Warehouse Association representatives appeared before the Committee on Thursday,26th February 2026 and submitted as follows;

AnalysisoftheProposedAmendments

i.Section 8(3) -Expansion of the Purpose of the Railway Development Levy

• 65.Proposed amendment: The Bill proposes to expand the statutory purpose of the Railway DevelopmentLevy(RDL) toinclude;
• a)financingthe development andconstruction ofrailwaytransportinfrastructure;
• b) the safety and economic regulation of railway infrastructure; and
• c) rehabilitation of railway transport infrastructure, subject to approval by the Cabinet Secretary responsibleforrailwaytransport.

• 66.Current provision: Under the Act, the RDL is solely intended to provide funds for the construction and operation of a standard gauge railway network to facilitate the transportation of goods.
• 67.KIFWA supports the proposed expansion, noting that Kenya already has a significant SGR network operational. Expanding the levy's statutory purpose to include infrastructure development, maintenance, and rehabilitation is justified to ensure sustainability and operational efficiency.
• 68.KIFWA further proposes that the scope expressly include any infrastructure that supports importation into Kenya, ensuring that the levy contributes to the broader logistics and trade facilitation ecosystem.

ii.Section 8(4) - Establishment of the Railway Development Levy Fund

• 69.Proposedamendment:The Billproposes the formal establishment of a RailwayDevelopment Levy Fund in statute.
• 70.Current provision: The Act currently empowers the Cabinet Secretary, through regulations, to establish the Fund. To date, no such regulations appear to have been enacted.
• 71.KIFWA supports the statutory establishment of the Fund, noting that it enhances transparency, accountability, and certainty regarding the custody and utilization of RDL proceeds.

ili. Section 8(4A) - Establishment of the Railway Development Levy Fund Board

• succession,intowhichtheFundshallvest.
• 73.Current provision: There is currently no distinct statutory Board overseeing the Fund.
• 74.KiFWA supports the establishment of a dedicated Board, which will strengthen governance and fiduciaryoversightoflevyproceeds.
• 75.Proposed amendment: The Bill proposes the following composition:
• a) Chairperson appointed by the President;
• b) Principal Secretary responsible for railway transport;
• Attorney-General;
• d) Secretary to the Fund; and

• e)Five non-public officer members appointed by the Cabinet Secretary responsible for railway transport, with expertise in infrastructure, finance, law, investment, or public-private partnerships.
• 76.Current provision: There is no existing Board under the current Act.
• 77.KIFWA proposes that the Board also include a representative from the clearing, forwarding, and
• 78.lncluding sector representation will enhance technical insight, stakeholder accountability, and operational relevance.

Amendmentstobeconsidered

Clause3

i.Expansion of the scope of the Railway Development Levy (RDL)

Proposal:

• facilities, port operations, and other logistics infrastructure linked to the movement of goods.

Rationale:

• 81.KiFWA further proposed that "connected purposes"be defined for purposes of Section 8 (3) to include infrastructure such as cargo handling facilities, port operations, and other logistics infrastructure linked to the movement of goods.They noted that the amendment will ensure the levy contributes effectively to the broader trade facilitation and logistics ecosystem, enhancing efficiency and supporting sustainable import operations.

CommitteeObservation

The Committee rejected the proposal as it would bring ambiguity for the purpose of the levy.

Subclause4B

ii.Board Composition-InclusionofKiFWARepresentation

Proposal:

• 82.Amend Section 8(4B) to ensure that the Railway Development Levy Fund Board includes a representative from the clearing,forwarding,and warehousing sector.

Rationale:

• 83.Freight forwarders and logistics providers are directly involved in the administration and collection of the RDL and understand its operational complexities, the inclusion of KiFWA or sector representation enhances the Board's technical insight, accountability, and responsiveness to trade facilitation challenges.
• 84.lt also aligns governance with stakeholder best practice and ensures decisions reflect practical realities of levy implementation.

Committeeobservation

• 85.The Committee rejected the proposal as there was no justification for their inclusion in the Board. Additionally, the nomination of the Members of the Board was a prerogative of the Cabinet Secretaryresponsiblefor matters relatingto railway transport.

ili. Expansion of the exemption from RDL to include Raw Materials and Capital Goods

Proposal:

• 86.Amend Section 8(6) and Part B of the Second Schedule to exempt all raw materials and capital goods used in manufacturing from the RDL.

Rationale:

• 87.KiFWA submitted that this would encourage investment, reduce production costs, and promote industrialization. It also aligns with Government objectives for value addition, job creation, and economicgrowth.

Committee observation

• 88.The Committee rejected the proposal as it was beyond the scope of the Bill.

iv. Expansion of the exemption from RDL to Include Air Cargo

Proposal:

• 89.Exempt air cargo shipments from the RDL.

Rationale:

• 90.KIFWWA submitted that Air cargo generally does not use railway infrastructure; applying RDL increases costs without supporting railway development. And therefore, exemption would improve logistics competitiveness and ensure levy application is targeted and efficient.

CommitteeObservation

• 92.1 The Committee rejected the proposal as it was beyond the scope of the Bill.

v.Expansion of the exemption from RDL to Include Courier and E-Commerce Parcels

Proposal:

• 91.Exempt small courier parcels and e-commerce shipments from the RDL.

Rationale:

• 92.These parcels are mostly transported by air or courier services and do not utilize rail infrastructure. This exemption would encourage e-commerce growth, which contributes to government revenue and employment. The Government is currently levying digital tax on e-commerce. The proposal also aligns with proportionality principles and reduces the compliance cost burden on small-value shipments.
• vi. Alignment of RDL with Import Declaration Fee (IDF)

Proposal:

• 93.Clarify in the Bill that the Railway Development Levy (RDL) shall continue to be collected alongside the Import Declaration Fee (IDF), as provided for under Section 7 of the Miscellaneous Fees and Levies Act, Cap. 469.

Rationale

• 94.ln practice, both the IDF and RDL have historically been administered simultaneously on imported IDF ensures predictable compliance for importers and administrative efficiency.
• 95.ln concluding their submissions, KIFWWA stated that they recognize the importance of the Miscellaneous Fees and Levies (Amendment) Bill, 2025, in supporting the development and sustainabilityofKenya'srailwayinfrastructure.

CommitteeObservation

96.The Committee rejected the proposal as it was beyond the scope of the Bill.

3.3 Submission by the Shippers Council of Eastern Africa

• 97.The Shippers Council of Eastern Africa made a written submission dated 23rd February 2026 and submitted as follows;
• 98.The Shippers Council of Eastern Africa (SCEA) submitted that they support the establishment of the Railway Development Levy Fund and its Board. They are cognizant that rail infrastructure development is critical to ensuring reliable, efficient, competitive, and sustainable movement of goods from the Port of Mombasa to Nairobi, Naivasha, Malaba, Nakuru, Kisumu, and transit countries,including Uganda,Rwanda,South Sudan,DRC,and Burundi,markets that account for nearly30%ofMombasaPortthroughput.
• 99.They noted that with Port of Mombasa throughput currently at 45.3 million tonnes and growing at an annual rate of l0.9%, such growth cannot be sustainably supported by road transport alone, underscoring the importance of adequate andwell-funded rail infrastructure.
• 100.SCEA further submitted that over the last two years, total tonnage of cargo transported by rail to the Inland Container Depot Nairobi increased by 15%, from 5.73 million tonnes in 2024 to 6.6 million tonnes in 2025, illustrating the growing importance of rail freight to national logistics. They cautioned that in the absence of adequate funding, competitive and reliable rail freight services cannot be sustained and risk regression, potentially eroding gains achieved following the development of the Standard Gauge Railway (SGR). They emphasized that continuous and adequate training in rail and rail-related disciplines is essential and proposed that capacity-building and training be included as eligible components under the funding framework.
• 101.However, against the backdrop of other levies and fees on imports including IDF (revenue of between KSh 45-60 billion), KEPHIS charges, KEBS charges, and NEMA (KSh I50 per item), SCEA (RDL) be reduced from the proposed 2% to I%. They noted that imports remain critical to Kenya's economy, with RDL collecting about KSh 48 billion annually and IDF between KSh 45-60 billion, and commended Kenyan businesses for their resilience despite challenging conditions. They further costswithraildevelopment.
• 102.On governance, SCEA urged that the Shippers Council of Eastern Africa be included in the Railway Development Levy Fund Board to represent the interests of importers, manufacturers, and

Proposed Amendments

i.On Clause 3BSection 8(3)

103.Delete (c) on the approval of the Cabinet Secretary and the Cabinet Secretary responsible for matters relating to the railway transporter, rehabilitation of railway transport infrastructure and instead add "that the funds shall also be used for Rail Freight subsidizing, Training, railway related courses, maintain loading infrastructures, construction of railway sidings, purchase on reefers, wagons andresearch anddevelopment"

CommitteeObservation

104.The Committee rejected this proposal.

i.Clause 3(c)-New Section 8(4B) -The Board

105.lnsert a new paragraph after (f): "(g) The members under paragraph (e) shall serve for a term of three years, renewable once, and appointments shall be through a competitive process."

Rationale

risks of entrenchment or favoritism, and ensures fresh perspectives, in line with best practices for public boards.

i.Clause 3(c)-New Section 8(4B)(e) -The Board Membership

• 107.Amend to specify that the five members appointed by the Cabinet Secretary must be nominated by relevant professional bodies and Private Sector Business Membership Organization and having the requisite expertise.Wepropose that thefollowingbe therelevantprofessionalandbusiness organization submitting representative to the Board (l) Shippers Council of Eastern Africa (2) the Engineers Board of Kenya, (3) ICPAK, or the Law Society of Kenya, (4) KAM (5) KIFWA).

Rationale

108.As currently drafted, the Cabinet Secretary has full discretion to appoint these five members. Mandating nominations from professional bodies enhances the independence of the Board and Shippers Council of Eastern Africa and beneficiaries of the resultant investments,movement of goods, to represent the interest of Shippers/Manufactures/lmporters/Produces

i.Clause 3(c) -New Section 8(4E)

• 109.Amend to reduce the maximum proportion of the Fund that can be used to secure additional

Rationale

• I10.Allowing90%oftheFundtobeusedassecurityforfurtherborrowingcouldleadtooverleveraging and leave insufficient liquidity for the Fund's primary operational purposes. A lower cap promotes better fiscal sustainability.We propose 75% that can be used to secure additional funds and not 90% as proposed.

Committeeobservation

• Ill.The Committee rejected this proposal as a modern railway system requires huge and intensive large-scale,long-term capital forits implementation.

i.Clause 3(c) - New Section 8(4F)

• abreakdownofwhatconstitutesthesecosts.

Rationale

• 113.A cap of 0.5% for administrative costs is exceptionally low compared to other public funds. There is a risk that this limit may be unrealistic for the effective recruitment and operation of a professional Board and secretariat,potentiallyleading to operational hurdles.

CommitteeObservation

• Il4.The Committee rejected this proposal, given the estimated annual RDL collections of Kshs. 45 billion, an estimated Kshs.2o0 million was adequate for administrative costs.

i.Clause 3(c) -New Section 8(41)

• 115.Amend to:"The Board shall submit to the CabinetSecretary,the CabinetSecretary responsible for matters relating to railway transport, and the National Assembly, once every three months reports detailing the inflows, outflows, and balances of the accounts established pursuant to subsection (4G), and make such reports publicly available on the Board's website."

Rationale

• I16.Remove the word at least and make it mandatory once every quarter to CS and Parliament. The current bill only mandates reporting to the executive branch. Requiring these reports to be tabled in Parliament ensures broader public accountability, enhances parliamentary oversight and public transparency allows the legislature to monitor the inflows and outflows of the Railway Development Levy Fund effectively. This is crucial for public funds.

Committeeobservation

• I17.The Committee supported the proposal to have the Board report to the Parliament, however the Committeeresolvedthatthereportingshouldbedoneannually.

i.RD Levy amount/rate

I 18.Reduce from 2% to I%.

Rationale

• I19.To balance between reducing business costs and rail development. With the projected port throughput annual increase of over l0% we are certain that the increased port throughput shall cushion against possible revenue loss when the I% is adopted.

CommitteeObservation

I20.TheCommitteerejected this proposal.

4.0COMMITTEEOBSERVATIONS

• 121.The Committee, having had engagements with stakeholders and considered submissions received, madethefollowingobservations;
• 1)The purpose of the Bill is to expand the purpose of the Railway Development Levy to cover broader railway transport infrastructure needs,including financing the development and construction of railway transport infrastructure, safety and economic regulation of railway infrastructure, and (upon approvals) rehabilitation of railway transport infrastructure. The current law limits the levy purpose to the construction and operation of the Standard Gauge Railwaynetwork;
• 2)A modern railway system requires investment beyond a single segment of SGR construction. The expanded purpose ensures the levy supports the broader rail infrastructure ecosystem required for a functional network. Notably, the Bill therefore supports the Government's d r o s infrastructure by enabling an innovative financing approach anchored on the Railway Development Levy (RDL). The key policy intent is to ensure the RDL is governed through an applied to secure additional funding, while maintaining robust public finance safeguards;
• 3) The Bill establishes the Railway Development Levy Fund in the Act and provides that the strengthens clarity and certainty over the custody of levyproceeds and ensures the Fund is anchoredinastablestatutoryframework;
• 4) The Bill also provides that a proportion of the Fund not exceeding ninety per cent (90%) may be applied to secure additional funding for railway transport infrastructure, the estimated collectionfromtheLevyisKshs.45billion;
• 5)The Bill establishes the Railway Development Levy Fund Board as a Statutory Body Corporate capable of holding assets, entering into contracts and performing functions necessary for the management of the Fund, ensuring transparency in the execution of transactions; and
• 6) The Bill also sets out the Board composition, including representation from the Principal Secretaries responsible for railway transport and finance, the Attorney-General, and independent members with expertise in infrastructure finance, law,investment or PPPs. The compositionblends sectorleadership andpublicfinanceoversightwithspecializedprofessional competence relevant to structured infrastructure financing.

CHAPTERFOUR

CHAPTERFIVE

5.OCOMMITTEERECOMMENDATION

• 122.Having had engagements with stakeholders and considered submissions received, the Committee recommends that theHouse approves the Miscellaneous Fees and Levies (Amendment)Bill (National Assembly Bill No.57 of 2025) with amendments as proposed in Chapter Six of this report.

.. DATE......o3..?......

SIGNED.

HON.GKGEORGEKARIUKI,CBS,M.P.

CHAIRPERSON,DEPARTMENTALCOMMITTEEONTRANSPORTAND INFRASTRUCTURE

6.0SCHEDULEOFAMENDMENTS

Upon considering the MiscellaneousFees and Levies(Amendment)Bill,2025,National AssemblyBill No.57and submissionsfrom stakeholders,theCommitteeproposes the following amendments:

I.CLAUSE3

THAT Clause 3 of the Bill be amended in paragraph (c) ——

(a)by inserting the following new subsection immediately after the proposed new subsection (4B)—

(4BA) Thefunctionsof theBoardshall be to-

• (a) formulate the strategic direction of the Fund including strategic plans, investment plans and policies;
• (b) set up administrative, governance and financial management structures of the Fund;
• (c)oversee the administration and management of the Fund;
• (d) coordinate the optimal utilization of the Fund in implementing programmes relating to thepurposeforwhich theFund is established;
• (e)supervise the performance of the Secretary to the Board, officers and staff of the Fund;
• (f) approve, monitor and evaluate the delivery of goods, works and services procured by the Fund;
• (g) approve and review the annual work programme and budget of the Fund;
• (h) approve, with the concurrence of the Cabinet Secretary, the investment policy, investmentplan andriskthresholdoftheFund;and

Justification:

The amendment seeks to provides for the functions of the Board established under the proposedsubsection4A.

(b)by inserting the following new subsection immediately after the proposed subsection (4B)-

(4BB) The Board shall have all the powers necessary for the proper performance of its functionsunder thisActandinparticular,theBoardshall havethepowerto—

CHAPTERSIX

• a) enterintocontracts;

2. (b) manage, control and administer the assets of the Board; 3. (c) receive gifts, grants, donations or endowments made to the Board and make disbursementsin accordancewith theAct; 4. (d) invest the funds of the Board not immediately required for the purposes of this Act in suchamannerasitmaydetermine;and 5. (e) operate a bank account into which all monies received by the Board shall be paid in the first instance and outofwhichallpaymentsshall be made by theBoard.

Justification:

The amendment seeks to set out the powers of the Board established under the proposed new subsection 4BB.

• (c) in the proposed new subsection 4l by inserting the words "and annually to the months'.

(4l) The Board shall submit to the Cabinet Secretary and Cabinet Secretary responsible for matters relating to railway transport at least once every three months and annually to the National Assembly reports detailing the inflows, outflows and balances of the accounts establishedpursuanttosubsection(4G).

Justification:

The amendment seeks to mandate the Board to also report to the National Assembly on an annual basisonthe inflows,outflows andbalancesof all the accountsof theFund.

Annexure I: Signed list of Members who attended the sitting that considered and adoptedthereport

REPUBLICOFKENYATHE NATIONALASSEMBLY

I3THPARLIAMENT-FIFTHSESSION-2026

DEPARTMENTALCOMMITTEEONTRANSPORTANDINFRASTRUCTURE

MEMBERSADOPTIONSCHEDULE

0310312026

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AGENDA:.

| NO. | NAME | SIGNATURE | |-------|--------------------------------------------------|-------------| | I. | The Hon.GK George Kariuki, CBS, MP - Chairperson | | | 2. | The Hon.Didmus Barasa,CBS,MP-Vice Chairperson | | | 3. | The Hon. Kiunjuri, Festus Mwangi, MP | | | 4. | The Hon.Abdul Rahim Dawood,CBS,MP | | | 5. | The Hon.Arama Samuel,MP | | | 6. | The Hon. Bady, Bady Twalib, MP | | | 7. | The Hon. Francis, Kajwang' Tom Joseph, CBS, MP | | | 8. | The Hon. Kiaraho, David Njuguna, MP | | | 9. | The Hon. Naicca, Johnson Manya, CBS, MP | | | 10. | The Hon. Chege, John Kiragu, CBS, MP | | | I1. | The Hon.Elsie Muhanda, MP | | | 12. | The Hon. Saney, Ibrahim Abdi, MP | | | 13. | The Hon. Hussein Weytan Mohamed, MP | | | 14. | The Hon. Jhanda Zaheer, MP | | | 15. | The Hon. Komingoi, Kibet Kirui, MP | |