President William Ruto signed the National Infrastructure Fund (NIF) Bill into law on March 9, 2026, creating a $38 billion (Ksh5 trillion) financing vehicle to build roads, railways, ports, airports and energy infrastructure over the next decade. The fund is seeded by $824 million (Ksh106.3 billion) raised from the Kenya Pipeline Company IPO, the largest privatisation exercise in Kenya in nearly two decades. It is also already the subject of two active court petitions, a politically charged accusation that it is an electoral slush fund, and a structural challenge involving the Senate that goes to the heart of its constitutional legitimacy. Whether the NIF becomes the financing breakthrough Kenya’s infrastructure deficit genuinely needs, or the next contested parastatals scheme, will be decided in the courts and in the 2027 election campaign before a single road is built.
The fund’s mechanics are straightforward on paper. It pools proceeds from the privatisation of state-owned enterprises, asset monetisation, and national resource revenues, then deploys that capital through public-private partnerships into priority projects. Every dollar invested is designed to crowd in up to ten additional dollars from pension funds, sovereign wealth partners, private equity and development finance institutions. The governing structure includes a Governing Council chaired by the Treasury Cabinet Secretary and including the Central Bank Governor and Attorney General, with six independent members appointed by the President for three-year terms. A seven-member board of directors, chaired by an independent director, handles day-to-day operations. The board is required to report quarterly to the Treasury.
The first project confirmed under the fund is the expansion of Jomo Kenyatta International Airport. The Standard Gauge Railway extension from Naivasha through Narok, Kisumu and to Malaba on the Ugandan border has also been cited as a priority, alongside major highway completions and port upgrades.
The fiscal context that made this necessary
Kenya entered 2026 with a debt burden that left the government almost no room to manoeuvre. Public debt reached approximately $89 billion (Ksh11.5 trillion) in May 2025. Debt servicing costs were absorbing nearly 70 percent of government revenues by some estimates, with Treasury Cabinet Secretary John Mbadi publicly acknowledging that close to half of all tax revenues were consumed by debt costs alone. The debt-to-GDP ratio stood at approximately 63 percent in 2024, well above the government’s own 55 percent target for 2028. The SGR from Mombasa to Nairobi cost approximately $7 billion (Ksh903 billion) in Chinese loans. The Naivasha extension stalled when the money ran out. Several major road projects have been suspended for the same reason.
Proposed tax increases to fill the gap were politically foreclosed. Youth-led protests in 2024 against the Finance Act left hundreds dead and forced a reversal of the tax hikes. The 2025/26 budget avoided introducing new taxes entirely. With borrowing constrained by debt levels and taxation constrained by political reality, the only remaining lever was asset monetisation: selling or partially privatising state-owned enterprises and recycling the proceeds into a ring-fenced infrastructure pool.
The KPC IPO was the first expression of that strategy and it worked technically. The offer, which ran from January 19 to February 24, 2026, attracted applications for 12.49 billion shares against 11.81 billion on offer, a subscription rate of 105.7 percent. Uganda, whose entire petroleum import supply transits the KPC pipeline from Mombasa, acquired a 20.15 percent strategic stake through the Uganda National Oil Company, converting itself from a dependent client into a shareholder with board representation. Rwanda’s pension funds also participated. The Nairobi Securities Exchange recorded its largest listing since Safaricom’s 2008 debut.
The Safaricom divestiture adds a further $1.9 billion (Ksh244.2 billion) to the pool: $1.58 billion (Ksh204 billion) from the sale of a 15 percent government stake to South Africa’s Vodacom, plus a $312 million (Ksh40.2 billion) advance against future dividends on the remaining 20 percent holding, approved by the National Assembly on March 10, one day after the NIF bill was signed into law. The National Treasury has identified at least ten further state corporations in line for privatisation.
The legal challenges
Two petitions are already before the courts and a third is likely. The Consumer Federation of Kenya filed two cases at the Nairobi High Court in December 2025 challenging the legality and parliamentary approval process of the NIF. The court declined to suspend the law pending hearing. Katiba Institute, the constitutional litigation lobby, filed a petition on March 17, one day before this article was written, seeking conservatory orders barring the government from operationalising the NIF and from channelling any privatisation proceeds into the fund. Katiba’s case rests on a structural argument: the Senate was excluded from the legislative process despite the fact that the law directly affects county finances and county-owned resources, which constitutionally require Senate involvement. The Institute also argues that the Act hands a $38 billion public fund to the national executive for operation outside the fiscal control and oversight framework established under the Constitution, specifically bypassing the Controller of Budget who is constitutionally mandated to supervise public expenditure.
These are not marginal objections. If the Senate exclusion argument succeeds, the entire legislative process must be repeated. If the Controller of Budget challenge succeeds, the fund’s deployment architecture would require fundamental restructuring. Both cases are live. Board appointments have not yet been made despite assurances they would be in place within days of the signing. The $2.7 billion (Ksh350.5 billion) already raised from KPC and Safaricom sits in limbo until the courts rule.
The political challenge
The 2027 general election is eighteen months away. Former Deputy President Rigathi Gachagua, who has significant political reach, has publicly accused Ruto of designing the fund to influence the electoral landscape. Kiharu MP Ndindi Nyoro, previously a close Ruto ally, has argued the structure allows the government to borrow outside the formal budget framework, increasing Kenya’s long-term debt burden through off-budget channels. Both men are positioning themselves for the election and have an incentive to amplify the critique. Both men also have a point.
The structural concern is legitimate: a fund that operates outside the standard budget process and is governed by presidential appointees, deployed in the years immediately preceding an election, to build roads and airports in politically salient constituencies, has all the characteristics of an instrument vulnerable to electoral capture. Kenya has seen this before. The National Youth Service, the National Hospital Insurance Fund, the National Cereals and Produce Board, and multiple parastatals have all been systematically looted through executive capture of governance structures that were theoretically independent. The NIF’s Governing Council and board architecture is better designed than most of those precedents. It is not immune to the pressures that destroyed them.
What the investment case looks like
Set aside the politics for a moment. The underlying economic logic is sound. Kenya has a genuine infrastructure gap: installed electricity capacity of 2,300 MW against a requirement of at least 10,000 MW for the industrialisation programme the government has committed to; a rail network that has not been meaningfully extended in a generation; airports running well above design capacity; and roads that are costing the economy billions annually in transport inefficiency. The SGR, for all the controversy over its financing terms, demonstrably reduced freight costs on the Mombasa-Nairobi corridor. More infrastructure of that quality would be economically productive.
The investment-led model the NIF proposes, pooling asset monetisation proceeds and using them to crowd in private capital at a ratio of one to ten, mirrors frameworks that have worked in comparable markets. Ruto cited Nigeria, Ghana, India, Canada, the UK and South Africa as precedents. The IFC was involved in the early design discussions. The model is not invented.
The key variable is governance. If the board is appointed on merit, if the Controller of Budget retains meaningful oversight, if the fund’s project selection is insulated from political direction, and if the courts uphold its constitutional standing, the NIF is a credible mechanism for closing Kenya’s infrastructure gap without adding directly to sovereign debt. If any of those conditions fail, it is a very large sum of money placed in an executive-controlled vehicle in an election year.
Bigger Picture: Kenya’s National Infrastructure Fund is the most ambitious attempt in the country’s recent history to solve a real problem by unconventional means. The problem is genuine: Kenya cannot borrow its way to the infrastructure it needs, cannot tax its way there without political consequences it has already experienced, and cannot wait for organic private investment at the pace the economy requires. The NIF’s answer, monetise the assets the state already owns and recycle the proceeds into new infrastructure, is economically coherent. The question is whether Kenyan institutions are strong enough to protect a $38 billion fund from the predictable pressures of a presidential election cycle. The courts will answer part of that question. The board appointments will answer another part. And the 2027 election will answer the rest.
Source: The Africa Report / Semafor / People Daily
