Kenya is poised for significant transformations in its infrastructure financing approach under a proposed new law creating the National Infrastructure Fund (NIF).
Despite resistance from certain stakeholders, President William Ruto has affirmed that the fund aims to move the nation away from heavy dependency on public borrowing and toward an investment-driven model focused on commercially feasible projects.
A major point of debate has centered on the Fund’s operational methods and its long-term viability. However, an examination of the proposed framework reveals an intricate structure that authorities expect to alleviate the financial strain on ordinary Kenyans regarding public infrastructure funding.
Established through the National Infrastructure Fund Act of 2026, the Fund operates as an independent corporate entity dedicated to commercially viable infrastructure. Fundamentally, the mechanism intends to expedite substantial national initiatives such as highways, railways, ports, electricity networks, irrigation systems, and other critical infrastructure.
One of the fund’s most significant changes is its financing approach, replacing reliance on substantial public debt with a structure designed to attract private capital and other non-conventional funding sources, including domestic pension funds, collective investment schemes, sovereign wealth funds, and climate finance facilities.
For citizens who bear the brunt of tax payments, the NIF represents a departure from direct national government borrowing. The objective is to lessen pressure on public debt by shifting from traditional sovereign loans to fund viable projects.
The Fund will primarily function as a corporate entity, similar to a limited liability company, with legal capacity to engage in lawsuits, own property, enter into contracts, and invest in projects.
However, the most significant limitation of the fund, and potentially a benefit for Kenyans, is that it is explicitly prohibited from borrowing or obtaining credit against its own financial statements. This essentially means it cannot independently accumulate debt.
Central to the NIF is its organizational structure, with the Fund to be overseen by a seven-member Board of Directors, chaired by an Independent director.
The Cabinet Secretary for the National Treasury will occupy a seat on the Board alongside four Independent directors and two individuals possessing development banking expertise.
To protect the board from political influence, stringent qualification requirements are established. Independent directors cannot have been employed by government entities in the preceding five years and cannot have political affiliations.
Directors must also avoid conflicts of interest related to suppliers, consultants, or auditors connected to the National Infrastructure Fund.
Directors will serve three-year terms, renewable only once. Reasons for removal from the board include bankruptcy, conviction, absenteeism, and entry into political office. These safeguards aim to strengthen integrity and stability.
So what responsibilities will the board assume? Their duties will include mobilizing resources, approving investment plans, formulating strategy, implementing risk management systems, appointing and dismissing the Chief Executive Officer, and assessing performance through measurable objectives.
The CEO, who will serve a four-year term (renewable once), will manage daily operations and must meet rigorous professional and ethical standards. They may also be removed for misconduct, incapacity, or inadequate performance following proper procedures.
Since the Fund will operate like a limited liability company, it will have diverse channels to secure capital for its projects, rather than depending exclusively on government borrowing. A primary funding source will be domestic resources, including revenues from the privatization and sale of government assets.
The government essentially plans to “recycle” wealth by directing these revenues into the fund, rather than utilizing them for short-term expenditures as has historically occurred.
Another funding source for the NIF is anticipated to be parliamentary appropriations. In this scenario, the National Assembly may allocate specific amounts to support infrastructure projects considered vital for national development.
The Fund can also leverage public sector involvement by mobilizing domestic pension funds, collective investment schemes, sovereign wealth funds, and climate finance to create investment opportunities generating commercial returns.
Finally, the Fund may accept donations, grants, or specialized project-specific financing from both local and international institutions. These funds are meant to support particular infrastructure projects with risks carefully managed, with these loans being precisely calculated rather than representing general borrowing to finance overall operations.