Explainer: The National Infrastructure Fund and its role in Kenya’s future

President William Ruto’s pressure to deliver the many promises he made for various sectors of the economy has driven him to form the National Infrastructure Fund.

On November 20, he announced the creation of the Fund that will be formally endorsed in a cabinet meeting on Monday in a move that will set a fresh trajectory of development for the country.

The Eastleigh Voice moved to dig into what the National Infrastructure Fund is and its significance in accelerating growth in the country.

What is the National Infrastructure Fund?

A National Infrastructure Fund (NIF) is a specialised Sovereign Wealth Fund (SWF) dedicated to the sole purpose of mobilising funds from dedicated sources and investments into national infrastructure projects. This, when competently done, saves the host country from more expensive sources of finance, such as commercial debt and additional taxes on citizens.

The NIF can operate as a stand-alone specialised sovereign wealth fund, or it can operate within the ambit of a broad-spectrum Sovereign Wealth Fund (SWF) or a dedicated national investment fund.

Sovereign Wealth Funds (SWFs) are state-owned investment funds primarily comprising government-generated capital. The target source funds for SWFs are often created using surplus national reserves, such as revenues from exports, natural resources, as suggested in Kenya’s case, or budget surpluses.

These are then managed to achieve long-term financial objectives for the country in various sectors of public need and for future hedging against volatile economic factors.

Genesis of the National Infrastructure Fund (NIF) in Kenya

President William Ruto gave his 2025 State of the Nation address to a joint sitting of the National Assembly and the Senate. He outlined his administration’s achievements over the last three years and revealed that he still has significant plans for the country.

He spoke of mega projects that would run to over Sh5 trillion. He also indicated that these projects would not be funded from the traditional sources of debt (international and domestic) or additional taxes on the citizens.

Ruto instead laid out his administration’s plans to set up and implement huge infrastructure projects whose funding will be sourced through a National Infrastructure Fund and a Sovereign Wealth Fund.

According to Ruto, this approach is a novel source of funding in the country and a complete move away from its traditional sources of funding for heavy infrastructure.

The President, placing his hopes on this new method of sourcing funds, targets to achieve his goals within 10 years. He indicated that the government is ready and set to undertake four game-changing projects within the public sectors of education, transport, energy and water irrigation as he reckons they hold the key to Kenya’s prosperity, now and into posterity.

“This is why we will establish the National Infrastructure Fund (NIF), whose architecture will be underpinned by the reforms in the Government-Owned Enterprises Bill, passed by this August House, that I will be signing into law tomorrow,” Ruto stated.

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Why use NIF to drive huge infrastructure projects?

Economic observers view Kenya as either ripe or overdue in setting up an NIF or a SWF. Kenya needs a Sovereign Wealth Fund (SWF) to manage its natural resource revenues, hedge against economic unpredictability, and ensure intergenerational equity by saving for the future. The need is especially pressing due to current economic pressures like high debt repayments and over-reliance on exported oil, volatile exchange rates, all of which the fund could help mitigate.

The ability of governments in medium to low-income countries to create and facilitate the deployment of blended finance, by using targeted public funds to leverage and “crowd-in” private finance to specific investment projects or finance facilities, is critical.

This is where NIFs come in handy as they are instrumental in delivering huge infrastructure projects primarily because they provide a source of patient, long-term capital and act as a catalyst for attracting long-term private investment.

Compared to private investors who may sometimes target faster returns, NIFs, just like SWFs, can invest over decades, aligning well with the long lifespan and high upfront costs of major infrastructure.

What are the benefits of setting up a NIF or an SWF?

An NIF reduces the need for the country to borrow always and thereby reduces, over time, a country’s debt as old debts are successfully retired.

This, in turn, would also occasion fewer tax demands to cope with high infrastructure expenditures, thereby enabling social stability within the country.

Setting up a properly -managed NIF would significantly result in a reduction of continuous commercial facilities taken by the Kenyan government to finance high-value infrastructure projects, especially in times of economic hardship.

It would also give out a much- expected intergenerational equity by ensuring that future generations benefit from the country’s current wealth and proper management of its national resources and dues.