Kenya’s newly established National Infrastructure Fund (NIF) is entering a critical phase as the government moves from establishing the Fund to determining how its resources will be invested. The National Infrastructure Fund Investment Policy, Sessional Paper No. 7 of 2026, currently before Parliament, provides the framework for investment selection, portfolio allocation, financing structures and risk management. The policy is particularly significant because it seeks to shift infrastructure financing towards a more commercially driven model, with the Fund expected to mobilize private capital alongside public resources.
The NIF was established in March 2026 under the National Infrastructure Fund Act, 2026. Its initial capital includes proceeds from the Kenya Pipeline Company IPO and the government’s partial divestiture of its stake in Safaricom. The government intends for the Fund to become a vehicle for financing large-scale infrastructure while leveraging domestic savings and private-sector capital, thereby reducing reliance on conventional government borrowing for commercially viable projects.
A key feature of the proposed Investment Policy is its emphasis on commercial returns and portfolio diversification. The policy proposes a minimum expected equity return of 7%, while individual projects would be capped at 20.0% of the Fund’s assets and exposure to a single sector would be limited to 40.0%. It also proposes that projects have at least 60.0% debt capacity through non-recourse financing, while preventing the Fund from borrowing against its own balance sheet. These provisions are intended to limit concentration and balance the Fund’s developmental mandate with financial sustainability.
The proposed investment universe covers strategically important sectors including transport, energy, ICT and data centers, water and irrigation, and agriculture and livestock infrastructure. This creates the potential for the NIF to become an important source of long-term capital for projects that require substantial upfront investment but can generate predictable revenues over extended periods. It could also provide pension funds, insurers, private equity investors and other institutional investors with greater opportunities to participate indirectly in infrastructure assets.
However, the policy’s success will ultimately depend on project selection and governance. Infrastructure projects carry significant construction, cost-overrun, regulatory, demand and revenue risks. A 7.0% return requirement, for instance, does not guarantee that projects will achieve their targeted returns. Strong due diligence, independent investment decisions, transparent procurement and effective monitoring will therefore be critical to protecting the Fund’s capital. The World Bank has similarly highlighted that while the NIF’s governance framework contains safeguards, implementation and governance risks remain important considerations.
The Fund also raises a broader question about Kenya’s public-finance strategy: can infrastructure increasingly be financed as an investment rather than through government borrowing? The government’s model envisages using public assets and domestic savings to crowd in significantly larger pools of private capital. The 2026 Budget Policy Statement indicates that the government expects the NIF to mobilize private investment through asset monetization, capital markets and domestic resource mobilization.
The proposed Investment Policy could mark an important change in Kenya’s infrastructure-financing model. Its success, however, will not be determined by the size of the Fund, but by whether it can identify commercially viable projects, generate sustainable returns, attract private capital and preserve public wealth. If effectively implemented, the NIF could transform infrastructure from a recurring pressure on the Exchequer into an investable asset class while deepening Kenya’s capital markets.
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