Railway Development Levy Fund Gets a New Board in Kenya

Kenya’s Railway Development Levy is charged on goods imported for home use, and the fund into which importers’ payments flow now has its own governing body. The Miscellaneous Fees and Levies (Amendment) Act, 2026 changes that, turning the Railway Development Levy Fund into a body corporate with its own board, and broadening what the levy can actually be spent on. This article covers what changed, why it matters to importers, and what to watch for as the new board becomes operational.

The Levy Itself Is Unchanged

Nothing in the 2026 amendment touches the rate or base of the Railway Development Levy. Importers into Kenya continue to pay the levy exactly as before. What has changed is the institutional structure sitting behind the levy: how the money is held, who decides how it is spent, and what purposes it can legally be applied to.

Section 8(1) and (2) of the Miscellaneous Fees and Levies Act charges the levy on goods imported for home use at two per cent of customs value, payable by the importer on entry.

The New Law: Miscellaneous Fees and Levies (Amendment) Act, 2026

The Miscellaneous Fees and Levies (Amendment) Act, 2026 (Act No. 6 of 2026) was assented to on 13 March 2026 and came into force on 27 March 2026. It amends the Miscellaneous Fees and Levies Act, Chapter 469C of the Laws of Kenya, the statute under which the Railway Development Levy is imposed.

A Broader Purpose for the Levy

Section 3 of the Amendment Act replaces the provision setting out what the Railway Development Levy Fund pays for. Previously framed narrowly around financing railway infrastructure development, the fund’s purpose now expressly extends to the safety and economic regulation of railway infrastructure, and, with the joint approval of the Cabinet Secretary responsible for finance and the Cabinet Secretary responsible for railway transport, the rehabilitation of railway transport infrastructure. In practice, this means levy proceeds can now legally support ongoing regulatory oversight and the rehabilitation of existing rail assets, not only new construction.

The Fund Becomes a Body Corporate With Its Own Board

The most significant structural change is the creation of the Railway Development Levy Fund Board. The amendment establishes the Board as a body corporate with perpetual succession and a common seal, capable in its own name of suing and being sued, holding and disposing of property, entering into contracts, and doing anything else a body corporate may lawfully do in the course of its functions. The proceeds of the levy are now expressly stated to vest in the Board, rather than being administered as before.

The Board’s functions include formulating the fund’s strategic direction, including its investment plans and policies, setting up the fund’s administrative, governance and financial management structures, overseeing the fund’s administration, coordinating how the fund is used to implement the programmes for which it exists, and supervising the fund’s secretary, officers and staff. The amendment also sets out grounds on which a board member can be removed, including absence from three consecutive meetings without the chairperson’s permission, bankruptcy or a composition arrangement with creditors, conviction for an offence involving dishonesty or fraud, a criminal conviction carrying a sentence of more than six months or a fine of more than ten thousand shillings, or incapacity through illness. The Cabinet Secretary is empowered to make regulations covering the recruitment of the fund’s secretary and staff.

Who Sits on the Board and How the Money Is Handled

The Board has a chairperson appointed by the President from among its appointed members, the Principal Secretary responsible for railway transport, the Principal Secretary responsible for finance, the Attorney-General, and five other members who are not public officers. Those five are appointed by the Cabinet Secretary responsible for railway transport and must have expertise in infrastructure finance, law, investment or public-private partnerships. The Board’s secretary sits as an ex officio member without a vote. Members other than ex officio members serve a three-year term, renewable once for a further and final three years.

The amendment also fixes how the fund is run. Administrative costs may not exceed 0.5 per cent of the fund. Up to ninety per cent of the fund may be used to secure additional funds for financing the development and construction of railway infrastructure, and money raised that way is paid into a special account whose transactions must be recorded, reported on and audited under the Public Finance Management Act, the Public Audit Act and other relevant written law. All money accruing to the fund goes into three accounts that the Board establishes with the Cabinet Secretary’s approval: a fund account, a general account for the fund’s ordinary purposes, and the special account. The Board must report the inflows, outflows and balances of those accounts to the relevant Cabinet Secretaries at least once every three months, and to the National Assembly annually.

Why This Matters for Importers and Logistics Businesses

For a business that pays the Railway Development Levy on every consignment it imports, the levy itself has not become more expensive, but the governance of the money has changed in ways worth understanding. A dedicated board with its own legal personality and investment powers is a materially different structure from a levy administered informally within a government department. Businesses that interact with the fund, for example in relation to exemptions, refund claims or disputes over levy assessments, should expect the newly constituted Board, once operational, to be the body actually responsible for those decisions rather than a ministry desk. The broadened purpose clause is also worth noting: rehabilitation of existing rail infrastructure being an eligible use of levy proceeds suggests the fund’s spending priorities may shift over time from pure new-build financing toward a mix of new construction, maintenance and regulatory oversight.

What to Watch For Next

The amendment leaves several operational details to regulations still to be made by the Cabinet Secretary, including how the Board’s secretary and staff will be recruited, how the fund is managed and administered, and how its money is used and apportioned. Those regulations must be made under section 24 of the Public Finance Management Act. Businesses with a significant import volume, or that have previously engaged with the Railway Development Levy Fund on refunds or exemptions, should watch for the Board’s constitution and for any procedural changes to how levy-related applications are handled once the new governance structure is in place.