The World Bank has cautioned that Kenya’s proposed National Infrastructure Fund (NIF) may provide only short-term relief to the country’s mounting fiscal pressures unless it is accompanied by deeper structural reforms aimed at improving revenue mobilisation, public spending efficiency and governance. The warning comes as the government seeks alternative financing mechanisms to sustain infrastructure development while reducing reliance on conventional borrowing.
In its latest assessment of Kenya’s economy, the World Bank notes that proceeds from privatisation and asset sales, which are expected to capitalise the proposed National Infrastructure Fund, could help finance commercially viable infrastructure projects. However, it argues that such measures do not address the underlying structural weaknesses that continue to constrain the country’s fiscal position. The institution maintains that while the initiative may ease immediate financing pressures, lasting fiscal sustainability will require sustained reforms to strengthen revenue collection, improve expenditure management and foster private sector-led growth.
The proposed Fund is anchored in the National Infrastructure Fund Bill, 2026, which outlines an ambitious mandate to transform how Kenya finances strategic infrastructure. The Bill states that the Fund will scale up and accelerate the development of catalytic national infrastructure, including highways, railway networks, airports, seaports, electricity generation, transmission and distribution systems, water reservoirs, irrigation projects and agribusiness infrastructure. It also seeks to mobilise private capital and non-traditional sources of financing, including domestic pension funds, collective investment schemes, sovereign wealth funds and climate finance.
Additionally, the Bill aims to reduce reliance on public debt to finance commercially viable infrastructure investments while strengthening the country’s capacity to originate, structure and execute major infrastructure projects. These objectives are intended to attract greater private sector participation and diversify Kenya’s infrastructure financing beyond conventional government borrowing.
The World Bank’s assessment comes as Kenya continues to manage a sizeable public debt burden alongside increasing development expenditure. For years, the government has relied on domestic borrowing through Treasury securities, including infrastructure bonds, and external loans to finance large-scale projects across transport, energy and water sectors.
While the proposed National Infrastructure Fund represents a shift towards innovative financing models, the World Bank maintains that its long-term success will depend on complementary fiscal and governance reforms. Without stronger domestic revenue mobilisation, more efficient public spending and improved institutional capacity, the Fund is likely to provide only temporary fiscal relief rather than a lasting solution to Kenya’s budgetary challenges. (Start your investment journey today with the cytonn MMF, call+2540709101200 or email sales@cytonn.com)
