In his 2025 State of the Nation address, President William Ruto pledged to set up a Sovereign wealth fund to finance this country’s new bold vision, something that has sparked debates.
For starters, a sovereign wealth fund (SWF) is a state-owned investment vehicle that pools public assets and deploys them for long-term national benefit.
According to President Ruto, the SWF will be complemented by a National Infrastructure Fund (NIF), as part of a broader strategy to finance development while easing pressure on taxes and public debt.
FISCAL REALITY
Notably, this is not a new concept in Kenya’s policy landscape. The country’s first significant attempt to establish an SWF was the Sovereign Wealth Fund Bill of 2014, which proposed a stabilisation, infrastructure and future generations framework but stalled before implementation. The current push builds on that earlier architecture, updated to respond to today’s fiscal realities.
Kenya’s proposed SWF is structured as a ring-fenced investment vehicle, legally separate from the annual budget. Its intended capital sources include proceeds from privatisation or partial listing of state-owned enterprises, dividends from government investments, and returns generated by the fund itself.
The NIF, by contrast, is sector-focused, targeting priority infrastructure in transport, energy, water, housing and logistics. Acting as an anchor investor, the funds are meant to crowd in private capital, pension funds and foreign co-investors through blended-finance and public–private partnership (PPP) structures, rather than relying on direct Treasury borrowing.
URGENCY
The urgency is fiscal. After years of debt-financed infrastructure expansion, Kenya’s debt-service burden has narrowed fiscal space and heightened sensitivity to new borrowing or higher taxes. Traditional financing—external loans or tax increases—has become economically and politically costly. The funds represent an attempt to monetise existing public assets, smooth financing across economic cycles and align long-term projects with long-term capital. In effect, they shift infrastructure financing from short-term budget pressures to a patient-capital model
GLOBAL PRACTICE
Globally, SWFs vary in size and mandate. Norway’s Government Pension Fund Global saves oil revenues for future generations; Gulf funds such as Abu Dhabi Investment Authority invest hydrocarbon wealth across global markets; China’s CIC focuses on strategic global diversification. Kenya’s proposal is smaller and hybrid. It is not resource-backed but asset-backed, relying on privatisation proceeds and investment returns, similar to emerging-market funds that use public asset recycling to finance development rather than commodity windfalls
Beyond the funds, the administration has promoted expanded PPPs, asset recycling through partial privatisations and listings, and blended-finance arrangements that combine concessional and commercial capital. These models aim to transfer some financing and delivery risk to private partners, unlock domestic savings—especially pension funds—and reduce the need for repeated tax hikes or sovereign borrowing. The approach reflects a shift from debt accumulation toward balance-sheet management
SAFEGUARDS
Crucially, the initiatives are anchored in statute rather than executive discretion. The proposed Sovereign Wealth Fund Bill establishes the fund as a distinct legal entity with defined objectives, permissible investments and funding sources, explicitly separating it from recurrent government expenditure. Transfers and operations remain subject to the Public Finance Management Act, parliamentary approval and audit by the Auditor-General. Infrastructure projects financed through the NIF fall under the PPP Act, which mandates competitive procurement, value-for-money assessments and clear risk allocation.
Safeguards include professional board appointments with fiduciary duties, separation of ownership and management, mandatory disclosure of audited accounts and performance reports, and rules-based withdrawal limits that bar use of funds for routine consumption. Parliamentary oversight, together with existing accountability institutions—the Controller of Budget, anti-corruption agencies and the courts—provide additional checks.
BOTTOMLINE
If implemented with discipline, Kenya’s sovereign wealth and infrastructure funds could mark a structural shift in development financing: away from perpetual borrowing and taxation, toward transparent, rules-based investment of public assets. The revival of an idea first formally articulated in 2014 underscores both continuity and learning—and reflects a renewed attempt to future-proof Kenya’s infrastructure financing model.
