With the recent passage of the National Infrastructure Fund Bill, 2025, by the National Assembly, Kenya is entering a new chapter in its approach to financing large-scale infrastructure. This is an important milestone that reflects both our ambition and our willingness to adapt.

The National Infrastructure Fund (NIF) is not just another statutory body. It is a deliberate effort to move away from solely relying on sovereign borrowing and instead focus on mobilising long-term, pooled capital. Where Kenya’s development goals sometimes meet fiscal limitations, this approach is both thoughtful and timely.

Passing the legislation is only the first step. The real challenge and opportunity lie in the implementation.

The Origins and Financing Architecture of the Fund

The idea for the NIF grew out of the need to address rising fiscal pressures after years of infrastructure growth funded mainly through government borrowing. As debt servicing became more challenging and global credit conditions shifted, it became clear that we needed new ways to attract long-term domestic and institutional investment.

One important aspect of the Fund’s capitalisation is the partial sale of government shares in Safaricom PLC.

Rather than stepping back from strategic assets, this move is about reinvesting in our country’s future. It also signals a broader commitment to market-based financing and transparent governance, drawing on the strengths we have seen in leading Kenyan companies.

Why the Fund is Emerging Now

Kenya still has ambitious plans for infrastructure, including transport, energy, housing, and logistics. For many years, these projects relied mainly on loans from abroad and government-backed debt.

As the pressure of debt servicing increased, policymakers recognised the need to look for new solutions. The NIF is part of this response, designed to bring in a wider range of capital sources and help reduce the immediate burden on public finances.

Under the Act, the Fund may draw resources from:

• Parliamentary appropriations
• Institutional investors
• Private sector participation
• Development partners
• Other legally permissible sources

This indicates a clear change in strategy. We are now viewing infrastructure financing as an investment platform, rather than merely a government borrowing issue.

What the Law Establishes

The Act creates the NIF as a corporate entity mandated to finance and invest in priority infrastructure projects.

The Fund is empowered to:

• Receive and manage capital contributions
• Invest in infrastructure projects and associated instruments
• Enter into financing and partnership arrangements
• Raise funds through permissible financial mechanisms
• Monitor and oversee funded projects

Governance is structured through a Board, with reporting and audit obligations anchored within Kenya’s broader public finance framework.

While the oversight mechanisms are designed to fit within our existing accountability structures, their effectiveness over time will be key to building and maintaining public trust.

What Changes in Practical Terms

The NIF changes how Kenya finances infrastructure in three main ways. First, it centralises infrastructure capital mobilisation under a specialised vehicle.  Then, it formalises participation pathways for institutional capital, including pension funds and long-term domestic investors. And finally, it enables new types of financing that do not depend on the annual budget cycle.

This has created hope for greater flexibility but has also drawn close attention from stakeholders. Supporters argue that this flexibility can speed up projects and attract private investment without putting immediate pressure on borrowing limits. Critics warn that if these new structures are not set up properly, they could create hidden debts that ultimately end up on the national budget. It’s important to remember that the Fund does not eliminate financial risk. Instead, it changes how the risk is handled and shared.

Public Reaction: Support, Scepticism, and Litigation

Since the NIF Act was enacted, public reactions have been diverse, reflecting a range of viewpoints.

Some economists and infrastructure advocates have welcomed the Fund as overdue innovation, particularly at a time when global financing conditions are tightening, and traditional borrowing space is narrowing.  Others have raised concerns about transparency in project selection, the risk of political influence, long-term liability exposure, and the strength of oversight.

Notably, two separate petitions have already been submitted by civil society activists challenging aspects of the Fund’s legality and governance structure. The petitions question whether the framework adequately safeguards public finance principles and if certain provisions risk circumventing constitutional safeguards related to public debt and parliamentary oversight.

These legal challenges have not stopped the Fund from moving ahead despite the lack of conservatory orders. Still, they do show that people remain concerned about transparency and long-term accountability.

On X, people have differing views. Some see the Fund as a needed step forward in managing the economy, while others worry it might just be a new way to package debt. The debate is not about whether Kenya should invest in infrastructure, but about the best way to pay for it.

Impact on Business and Capital Markets

For businesses and investors, the NIF is a major change. For financial institutions, the Fund could create new opportunities in structured finance, bond issuance, and advisory services for infrastructure projects.

For construction, engineering, energy, and logistics companies, the Fund could mean a steadier flow of projects, as long as funding is timely and clear.  For pension funds and long-term investors, the Fund provides a new kind of local infrastructure investment. However, their interest will largely depend on clear rules and how risks are allocated.

For multinational companies in Kenya, this move sends a message that extends beyond merely infrastructure. Kenya is evolving in how it manages public finances. Investors will be observing not only how funds are raised but also the transparency and accountability of the process.

The Broader Political Economy Question

Infrastructure remains central to Kenya’s development story. What is changing now is our approach to financing it.

The traditional model: borrow externally, build, repay, is under strain. The NIF reflects recognition of that strain. However, new vehicles do not automatically resolve existing problems. The success of the Fund will rely on clear project prioritisation, transparent reporting, strong insulation from political cycles, and careful risk management.

The Question Ahead

Kenya has achieved more than merely establishing a new fund. This action indicates a wider shift in our approach to financing the future. If executed with discipline and transparency, the NIF could enhance participation in capital markets and reduce pressure on public borrowing. However, if not managed carefully, the Fund could add complexity to an already challenging fiscal environment. Ultimately, it is how we structure and manage these financing tools that will determine whether this reform strengthens Kenya’s economic foundation or creates new challenges.