Kenya will attempt something rare among heavily indebted emerging markets: building highways, railway lines, and airports without borrowing.
- •The proposed National Infrastructure Fund Bill, 2025, that is now before Parliament aims to establish a corporate investment vehicle designed to mobilize private and non-traditional capital for commercially viable infrastructure projects while explicitly prohibiting the fund from borrowing on its own balance sheet.
- •The Fund, championed by Treasury Cabinet Secretary John Mbadi, is a structural shift in how the country intends to finance its development henceforth.
- •At the heart of the Bill is a brake that prevents the proposed Fund from issuing bonds, taking bank loans, or leveraging itself to raise capital.
Any financing would have to occur at the project level through equity stakes, structured finance or debt instruments tied directly to bankable projects. The distinction is designed to prevent the vehicle from becoming an off–balance sheet borrowing arm of the state.
By separating fund-level solvency from project-level risk, the Treasury is attempting to reassure investors and lawmakers that the vehicle won’t accumulate hidden liabilities. Whether the safeguard holds will depend on how strictly commercial-viability tests are enforced and whether government guarantees are used sparingly.
Mbadi has framed the fund as a self-sustaining investment platform where returns from infrastructure assets would be reinvested to compound capital, potentially supplemented by future dividend flows from state holdings if Parliament so decides. The goal is to recycle capital rather than draw on the exchequer.
The Treasury is targeting KSh 5 trillion in mobilized capital over time, relying on a blend of asset monetization, pension-fund allocations, sovereign partners, private equity and climate-finance pools. Officials have outlined an ambition to crowd in ten shillings of long-term investment for every shilling committed to the fund; an aggressive multiplier that would require strong investor appetite and a robust pipeline of bankable projects.
The sectors identified are expansive: national highways, rail networks, air and sea ports, electricity generation and transmission, water reservoirs and irrigation systems, and agribusiness infrastructure. Among projects cited in parliamentary discussions are the dualling of Thika Road, the expansion of the Athi River–Namanga corridor, and modernization of Jomo Kenyatta International Airport (JKIA).
Whether the safeguard holds will depend on how strictly commercial-viability tests are enforced and whether government guarantees are used sparingly.
The model resembles asset-recycling programs seen in developed markets, where mature state assets are monetized to fund new infrastructure. It also draws comparisons to state-backed investment arms such as Singapore’s Temasek Holdings and Malaysia's Khazanah Nasional, though Kenya’s proposal stops short of creating a sovereign wealth fund.
Unlike sovereign wealth funds that manage a country’s reserves or resource proceeds and invest globally for long-term returns, the NIF is a domestic-focused vehicle designed solely to finance commercially viable infrastructure projects. It cannot borrow on its own balance sheet, cannot diversify into unrelated asset classes, and is explicitly structured to mobilize private and non-traditional capital for roads, railways, ports, energy, water, and agribusiness.
The fund would be overseen by an independent chair and four independent directors, alongside two members with development-banking expertise. The Treasury Cabinet Secretary or a representative and the fund’s chief executive would sit as ex-officio members. Directors must have at least 15 years of senior management experience and anyone affiliated with government employment or political parties within the preceding five years would be disqualified; an attempt to insulate the vehicle from political patronage.
The Safaricom Stake Seed Money
The fund’s rollout is entangled with a politically sensitive divestiture debate involving Safaricom. Lawmakers have questioned why the bill was not introduced before public consultations over government share sales and have raised concerns about long-term sustainability once high-performing assets are monetized.
Some MPs have criticized the decision to sell shares to Vodacom rather than prioritizing local investors through the Nairobi Securities Exchange (NSE), arguing that strategic national assets could shift further into foreign hands.
Whether investors accept the premise that infrastructure can scale without expanding sovereign debt will determine whether the fund becomes a template for fiscal reform or another ambitious restructuring tested by market reality.
However, Mbadi defended the approach as a pricing decision, contending that a public listing might have required selling at a discount, while a strategic transaction could command a premium. The Cabinet Secretary also rejected calls to divert divestiture proceeds directly to county-level social programs, maintaining that such expenditures remain within the national budget framework.
The unresolved question is sustainability. If the fund cannot borrow and is seeded primarily with proceeds from asset sales, its long-term viability depends on three variables: consistent returns from completed projects, steady inflows from institutional investors, and a credible pipeline of commercially viable infrastructure. Should those flows stall, political pressure to amend the no-borrowing restriction could mount.
For now, the National Infrastructure Fund Bill marks an attempt to pivot Kenya from a tax-and-borrow development model toward a capital-markets-driven approach. In the seven-month of this financial year, the Treasury revealed that development spending collapsed to KSh 167.8 billion, achieving just 41.2% of the planned KSh 407.1 billion. By contrast, recurrent expenditures soared to KSh 885.7 billion and debt servicing dwarfed both, consuming KSh 1.075 trillion.
The data shows that the national budget is heavily skewed toward obligations and salaries, leaving minimal fiscal room for critical infrastructure investment even as a majority of them continue to deteriorate. Whether investors accept the premise that infrastructure can scale without expanding sovereign debt will determine whether the fund becomes a template for fiscal reform or another ambitious restructuring tested by market reality.
