Kenya needs roads, airports, railways, power, water systems, irrigation and digital infrastructure. It also faces a difficult reality: the traditional model of borrowing heavily for every major project has stretched public finances. The National Infrastructure Fund is designed as an alternative. Instead of relying only on taxes and new debt, the state can use privatisation proceeds and attract pension funds, banks, sovereign investors, private equity and development-finance institutions.
The model has already moved beyond theory. The Kenya Pipeline Company share sale reportedly raised KSh 106.3 billion after the government sold a 65 per cent stake. The government has said part of those proceeds will support infrastructure, with KSh 15 billion to KSh 20 billion identified as seed financing for the expansion of Jomo Kenyatta International Airport. A planned partial sale of the government’s Safaricom stake has also been discussed as a source of capital.
Why the model is attractive
Infrastructure has a long life but a huge upfront cost. A highway or airport can take years to design and construct before the economic benefits are fully visible. Government borrowing can bridge that gap, but debt must be serviced immediately and often in foreign currency. When interest rates or exchange rates move against the country, the burden grows.
A professionally managed infrastructure fund can pool different sources of money and invest in projects that generate measurable economic returns. It can also create discipline by separating project selection from the annual political budget cycle. If a project must attract serious investors, its costs, revenue model and risks receive closer scrutiny.
Selling an asset is not free money
The danger is that privatisation proceeds can be mistaken for ordinary revenue. When government sells part of a profitable company, it receives cash today but gives up part of the future dividends and influence associated with that asset. The transaction only creates long-term value if the proceeds are invested in something that produces equal or greater public benefit.
That is why the destination of every shilling matters. Using proceeds to build productive infrastructure may strengthen trade and growth. Using them to cover recurrent expenditure would convert a permanent asset into temporary relief.
The hidden risks in private infrastructure finance
Private capital does not remove risk; it reallocates it. Investors expect returns. Those returns may come from tolls, airport charges, electricity tariffs, government availability payments, land value or guarantees. A project can remain ‘off the public balance sheet’ while taxpayers still carry contingent liabilities if traffic, revenue or demand falls below expectations.
There is also a governance risk. Large infrastructure projects create opportunities for inflated costs, politically selected contractors, land speculation and opaque concessions. A fund that is independent in name but politically controlled in practice can reproduce the same weaknesses as ordinary public procurement.
Questions Parliament and citizens should ask
- What asset is being sold, what percentage is changing hands and how was the price determined?
- Will proceeds be ring-fenced for long-term investment, or can they be diverted to recurrent spending?
- Who appoints the fund managers and investment committee, and how are conflicts of interest handled?
- What project-selection criteria will be published before investments are approved?
- Which risks are carried by investors, and which remain with taxpayers through guarantees or minimum-revenue promises?
- Will projects introduce tolls, user charges or tariff increases, and how will vulnerable users be protected?
- How will the public measure returns – financial profit, jobs, lower transport costs, export growth or service access?
Pension money requires special protection
The proposed fund may attract pension funds because infrastructure can provide long-term returns that match long-term retirement obligations. This can be sensible, but pension money is workers’ deferred income. It should not be pushed into politically attractive projects that lack commercial discipline. Independent due diligence, diversification and clear limits are essential.
What success would look like
A successful National Infrastructure Fund would publish audited accounts, disclose every major investment, competitively select fund managers and show clear results. Projects would be chosen because they reduce logistics costs, expand reliable energy, unlock agriculture, improve urban mobility or increase exports – not because they produce the best campaign photograph.
The fund could help Kenya escape the cycle of borrowing for every bridge, road and airport. But it could also become a complicated channel for transferring public assets and future revenues without enough scrutiny. The difference will be governance.
The bottom line
Kenya should explore new ways to finance development. The debt burden makes that unavoidable. Yet innovation in finance must not become a substitute for accountability. Citizens are not only taxpayers; they are the ultimate owners of state assets. Any sale must therefore answer a simple question: after the cash is spent, will the public be wealthier, more productive and better served than before?
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