Nairobi — Kenya’s Cabinet has approved the establishment of two major financing vehicles—an Infrastructure Development Fund and a Sovereign Wealth Fund—as part of efforts to fund large-scale projects while reducing reliance on traditional public borrowing.
The funds are designed to support priority investments such as roads, power generation and other strategic infrastructure, at a time when Kenya is facing mounting pressure from high debt-servicing costs. Over the past decade, heavy borrowing to finance infrastructure has pushed the country’s debt-service-to-revenue ratio among the highest in Africa, limiting fiscal space.
How the funds will work
According to a Cabinet statement, both funds will operate under independent, professional management, guided by clear rules on governance, transparency and accountability. The government says this structure is intended to attract long-term capital and reassure investors.
In addition to public seed funding, the funds will be open to a wide range of investors, including:
Pension funds
Sovereign and bilateral partners
Private equity firms
Development finance institutions
Funding sources
Finance Minister John Mbadi recently said the government plans to use proceeds from the sale of a 15% stake in Safaricom, Kenya’s largest telecoms company, as initial capital for the two funds.
Another proposed source of financing is a partial share sale in the state-owned Kenya Pipeline Company, which operates petroleum transport infrastructure within Kenya and across neighbouring countries.
Reducing debt pressure
President William Ruto has argued that the infrastructure fund, first announced in October, will allow Kenya to invest in critical sectors without adding to public debt, which has strained government finances in recent years.
Focus on power and industrial growth
A key priority for the funds will be expanding electricity generation. Kenya currently has about 2,300 megawatts of installed power capacity, far short of the estimated 10,000 megawatts the government says are needed to support large-scale industrialisation and sustained economic growth.
Broader economic strategy
The creation of the two funds aligns with the administration’s broader strategy to:
Mobilise private and institutional capital
Lower borrowing costs
Support long-term development through alternative financing models
If implemented as planned, the funds could mark a significant shift in how Kenya finances development—moving away from debt-heavy approaches toward investment-led growth anchored in stronger fiscal discipline.
Source:Africa Publicity
