For years, Kenya has built its major projects, including roads, railways, and even the ambitious nuclear power plant, largely on borrowed money. That model is now running out of road. With public debt at roughly KSh12.4 trillion, close to 70% of the gross domestic product (GDP), and interest payments taking up a growing share of the budget, the government has turned to a different idea: the National Infrastructure Fund (NIF). 

  

The NIF, which raises money from investors rather than lenders, became law earlier this year and is already reshaping how Nairobi talks about paying for the things this country needs to function.  

From Bill to Law in Six Weeks  

The National Infrastructure Fund Bill, 2026, was published on January 23 and sponsored by the Leader of the Majority Party, Kimani Ichung’wah. It moved swiftly: a first reading on February 12, a second reading on March 3, approval at the Committee of the Whole House on March 5, and presidential assent on March 9, becoming the National Infrastructure Fund Act, 2026. Lawmakers who backed it called it one of the most consequential pieces of legislation the National Assembly has passed since independence. They argued that it would enable Kenya to build infrastructure without adding to sovereign debt. The Bill passed with amendments to tighten oversight, including creating a Governing Council that sits above the Fund’s management board.  

The law sets an ambitious ceiling: mobilising close to KSh5 trillion over the next decade. Roughly half, about KSh2.5 trillion, is targeted for the first phase, with the balance raised progressively over ten years. The Fund is structured as a body corporate with the capacity to own property and enter into contracts. Still, it is explicitly barred from borrowing against its own balance sheet, a design intended to prevent it from simply becoming another vehicle for debt. But where does the money come from? 

The Source 

The NIF’s seed capital comes from the proceeds of the privatisation of state assets. This includes proceeds from the partial sale of the Kenya Pipeline Company and stakes in other state-linked firms, such as East African Portland Cement. Beyond that, the Fund is designed to attract domestic pension funds, collective investment schemes, sovereign wealth capital and climate finance institutions, alongside grants and government allocations.  

However, public-private partnerships are the Fund’s real engine. Officials have described a model in which every shilling of public or seed capital is intended to attract additional private investment. This will turn the NIF into a platform for structuring bankable, revenue-generating projects rather than a pot of free money. A draft investment policy, Sessional Paper No. 7 of 2026, sets out the commercial logic: projects funded by the NIF must target at least a 7 per cent equity return; no single sector can absorb more than 40 per cent of the Fund; and no single project can take more than 20 per cent of the Fund’s total value. With the Fund reportedly holding around KSh340 billion so far, that caps any one project at roughly KSh68 billion. Parliament opened that policy for public scrutiny, and submissions were due by August 24, 2026, meaning the rules governing how this money is spent are still being finalised even as the Fund operates.  

Growing Pains in Parliament  

The NIF’s rollout has not been friction-free. In May, Treasury Cabinet Secretary John Mbadi was summoned by the National Assembly’s Energy Committee after the government moved agencies, including Kenya Power, KenGen, KETRACO and the Geothermal Development Company, along with tens of billions of shillings’ worth of projects, out of the Energy Ministry’s budget and into the NIF. Committee members argued that the transfer occurred without proper parliamentary approval and gutted the ministry’s budget. Treasury defended the move, saying that commercially viable state companies should finance their own capital projects rather than relying on the Exchequer, freeing up scarce public money for sectors such as health and education.  

Separately, opposition figures have questioned whether Treasury has provided Parliament and the courts with consistent accounts of the Fund’s legal status, adding a political dimension to what is otherwise a technical debate about public finance.  

The Road Ahead  

The NIF represents a genuine attempt to wean Kenya off debt-financed construction and to channel pension savings, sovereign wealth and global capital into projects that actually pay for themselves. Whether it delivers depends on execution: honest project selection, parliamentary oversight, and investors willing to bet on Kenyan infrastructure for the long haul. For now, the Fund is operating, the rulebook is still being written, and Parliament is watching closely – and so should we.