President William Ruto’s State of the Nation Address introduced a plan to mobilise KSh5 trillion to establish a sovereign wealth mechanism anchored on the National Infrastructure Fund. Presented as a long-term strategy to bridge infrastructure gaps while reducing dependency on expensive public debt, the proposal signals a deeper structural shift in how the state intends to finance development. Yet it also raises hard questions about fiscal credibility, privatisation proceeds, and the political economy of the Government Owned Enterprises (GOEs) Bill 2025 that will soon be assented.
All You Need To Know About The National Infrastructure Fund
At the centre of the President’s announcement is the National Infrastructure Fund, which will be structured under the newly passed Government Owned Enterprises Bill 2025. This legislation creates a unified governance framework for state corporations, including oversight models intended to reduce inefficiencies and ring-fence revenues. According to President Ruto, this architecture will provide the foundation for a sovereign wealth-style investment vehicle capable of attracting long-term institutional capital into roads, energy, logistics, water projects, and digital infrastructure. The framing is clear: Kenya wants to pivot from debt-financed development to investment-led growth.
The KSh5 trillion requirement captures both the scale of Kenya’s infrastructure deficit and the ambition to unlock new capital sources. The President’s plan envisions privatisation proceeds as the seed capital for the National Infrastructure Fund. He emphasised that these proceeds will be ring-fenced, ensuring they are not absorbed into recurrent spending or used to plug short-term fiscal holes. This ring-fencing aligns with global sovereign wealth fund models, where proceeds from asset sales, natural resources, or budget surpluses are invested for long-term national benefit. For Kenya, however, this approach immediately conflicts with fiscal realities already documented in the 2025/26 Budget Policy Statement.
Kenya Pipeline Company Privatisation
A critical tension arises from the fact that privatisation proceeds, particularly from the Kenya Pipeline Company (KPC), have already been earmarked for settling pending bills in the 2025/26 fiscal framework. The government’s outstanding obligations, especially to contractors, counties, and suppliers, are mounting, and the Treasury has repeatedly identified asset sales as one of the feasible short-term revenue sources. If privatisation proceeds are now to be exclusively channelled into the National Infrastructure Fund, the government must clarify how it intends to finance these pending bills without further widening the deficit. This contradiction underscores persistent fiscal pressures that the President’s address did not fully reconcile.
Another area demanding deeper scrutiny is the projected multiplier effect of privatisation capital. President Ruto stated that every KSh1 raised from privatisation will be used to attract KSh10 in private capital through blended finance, co-investment structures, and infrastructure-backed securities. This is a dramatic escalation from just three weeks ago, when the Chairman of the President’s Council of Economic Advisors indicated a ratio of KSh4 of private capital for every KSh1 in privatisation proceeds. The sudden inflation of expectations, from 1:4 to 1:10, raises questions about the modelling, the risk appetite of global investors, and the government’s assumptions about market conditions.
Achieving a 1:10 ratio would require exceptional investor confidence, clear project pipelines, de-risking frameworks, and safeguards against political interference, areas where Kenya has historically struggled. Many public-private partnership (PPP) projects in Kenya have faced delays, cost escalations, or cancellations due to land disputes, procurement challenges, or changes in political priorities. Without addressing these underlying barriers, the National Infrastructure Fund may struggle to meet its mobilisation targets.
Kenya’s Public Debt Has Surged Past Ksh11 Trillion
The President’s State of the Nation Address attempted to situate the National Infrastructure Fund within a broader narrative about economic reform, productivity, and fiscal responsibility. He highlighted ongoing efforts to restructure state corporations, reduce wasteful expenditure, and improve revenue performance. However, the economic backdrop remains complex. Growth is still fragile amid global uncertainty, public debt has surged past KSh11 trillion, and debt servicing now consumes an overwhelming share of revenues. In this context, the National Infrastructure Fund could either become a transformative solution, or a high-risk experiment overly dependent on optimistic projections.
The Government Owned Enterprises Bill, from which the Fund draws its institutional basis, is designed to professionalise state corporations through independent boards, performance contracts, and transparent reporting. If rigorously implemented, this framework may strengthen investor confidence by reducing governance risks and improving the commercial viability of state-owned entities that will act as project sponsors. But implementation will require political discipline, insulation from patronage networks, and sustained buy-in from ministries and agencies accustomed to autonomy. Investors will be watching closely to see whether these reforms move from paper to practice.
Another key consideration is the country’s privatisation pipeline. Beyond KPC, several other major state enterprises are being prepared for divestiture, including those in energy, finance, transport, and manufacturing. The success of the National Infrastructure Fund will depend heavily on whether these transactions are transparent, competitively managed, and free from political meddling. Any controversy or perceived undervaluation in asset sales could undermine the credibility of the entire model.
Easing Pressure On Domestic Borrowing
The President’s strategy also reflects the global trend of countries using sovereign wealth funds and infrastructure funds to stabilise long-term investment flows. For Kenya, which lacks natural resource surpluses like oil-rich nations, the Fund would rely on monetisation of state assets and the commercialisation of public infrastructure. This model can work, Singapore’s Temasek and Malaysia’s Khazanah are examples, but the governance bar must be exceptionally high to avoid mismanagement or political capture.
In addition to financing infrastructure, the National Infrastructure Fund is intended to ease pressure on domestic borrowing by creating an investment vehicle capable of attracting pension funds, sovereign wealth funds, private equity investors, and development finance institutions. Kenya’s own pension industry, with assets exceeding KSh1.6 trillion, represents a potential anchor investor group. But pension trustees will require assurances of stability, fair returns, liquidity mechanisms, and ring-fenced governance to justify allocating funds to long-term, illiquid infrastructure projects.
Roadmap And Timelines For Infrastructure Fund
The State of the Nation Address framed the KSh5 trillion initiative as a visionary, long-term economic transformation plan. Yet the President must now provide a clear roadmap detailing the timelines, governance structures, risk frameworks, and project priorities under the National Infrastructure Fund. Citizens and investors alike will seek assurances that the Fund will not become another politically controlled entity vulnerable to misallocation or opaque decision-making.
In its best form, the National Infrastructure Fund could become the backbone of a more sustainable financing model, unlocking billions for roads, energy, water, and logistics while reducing debt vulnerability. But without fiscal clarity, credibility around privatisation proceeds, and realistic mobilisation assumptions, the plan risks being viewed as an aspirational announcement rather than a concrete shift in policy.
President Ruto’s challenge now is to transform a bold vision into a practical, coherent, and transparent national investment framework, one capable of delivering long-term infrastructure development while safeguarding public resources.
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