The establishment of the National Infrastructure Fund (NIF) marks one of the most significant developments in Kenya’s economic architecture in recent decades. For the first time, Kenya has a dedicated institution with the opportunity to mobilise long-term equity capital, crowd in private investment and systematically develop nationally significant infrastructure through commercially viable enterprises.
The Fund has already been capitalised with approximately Sh347 billion (approximately US$2.7 billion) from the partial privatisation of Safaricom PLC and Kenya Pipeline Company, giving Kenya one of the largest pools of development capital on the continent. By comparison, the Africa Finance Corporation (AFC), today one of Africa’s leading infrastructure investment institutions, commenced operations with an initial paid-up capital of approximately US$1 billion before leveraging that capital to mobilise substantially larger pools of investment across the continent.
The Board has already held its inaugural meeting and commenced preparation of the Investment Policy Statement (IPS), which will guide how these resources are invested and deployed. Once prepared, the IPS will proceed through the governance and statutory approval processes provided for under the National Infrastructure Fund Act. While those processes are underway, it is useful to consider what this capital base could achieve under prudent and conservative assumptions.
If the Fund earned an annual cash return of approximately 12 per cent, it would generate roughly Sh42 billion each year. Even if only about Sh34 billion of that investment income were deployed annually into new investments, while preserving and growing the underlying capital, the scale of infrastructure investment that could be unlocked would be unprecedented.
The Fund’s true strength, however, lies not in what it invests itself, but in what it enables others to invest.
Institutional investors, including pension funds, sovereign wealth funds, insurance companies and global infrastructure investors, prefer professionally managed investment vehicles offering strong governance, diversification and a pipeline of opportunities. The NIF has the opportunity to provide precisely that platform.
If every shilling invested by the Fund attracted just one additional shilling of private capital, a deliberately conservative assumption, Kenya could mobilise between Sh70 billion and Sh90 billion of equity capital every year.
Since infrastructure projects are typically financed with approximately 30 per cent equity and 70 per cent long-term non-recourse debt, that level of equity could support Sh240 billion to Sh300 billion of infrastructure investment annually, approximately US$2 billion every year.
Put differently, Kenya has the capacity to bring projects equivalent to two expansions of Jomo Kenyatta International Airport to financial close every year using only part of the investment income generated by the Fund, before even considering deployment of the underlying capital itself.
That is a remarkable opportunity. Yet, in my view, the Fund’s greatest contribution is not the capital it provides.
It is the development model it enables. The NIF has been established to invest in commercially viable infrastructure. That distinction fundamentally changes how projects are conceived, developed and managed.
Commercial projects repay investors from the cash flows they generate over their operating lives. Commercial viability is therefore not simply a financing requirement; it is the organising principle of
the entire development model. Because projects must ultimately repay investors from their own revenues, development begins with customers, markets and demand rather than with the asset itself.
The first questions therefore become: Who are the customers? How large is the opportunity? What reforms are required to expand demand? Which industries will use the infrastructure? Which strategic partners should participate? How do we maximise revenues throughout the life of the enterprise?
Engineering, procurement and construction then become the response to a clearly defined commercial opportunity, not the starting point.
This represents an important evolution in Kenya’s infrastructure model.
Government has successfully delivered strategic infrastructure through public investment, while the private sector has developed commercially driven projects across multiple sectors. Both approaches have made significant contributions to Kenya’s development.
The NIF combines the strengths of both. Like the private sector, it begins with commercially viable enterprises that must succeed on their own merits. But because it is a national institution, it can also coordinate government around policy alignment, regulatory reform, project preparation and strategic risk mitigation in ways that individual private investors cannot.
This ability extends throughout the entire investment lifecycle. Before financial close, the Fund can improve project preparation, coordinate approvals and strengthen bankability. During construction, it can align complementary public investments and supporting reforms with project delivery. After operations commence, it can continue supporting enterprise and sector development so that customer demand, revenues and enterprise value continue growing over time.
This continuity reduces risk throughout the life of the investment, lowers the cost of capital and improves long-term enterprise value.
More importantly, this coordinated approach extends well beyond the infrastructure project itself.
As strategic bottlenecks are removed and enterprise risk declines, confidence grows across the wider economy. Hotels expand around airports. Manufacturers invest in industrial parks. Exporters increase production. Logistics companies build distribution networks. Farmers invest in higher-value agriculture. Technology firms establish new operations.
The NIF therefore does not simply crowd capital into infrastructure.
It crowds capital into the industries that depend upon that infrastructure.
For the first time, government, investors, operators and customers become aligned around a common objective: Growing the revenues of commercially successful enterprises.
That alignment creates a powerful incentive to improve the ease of doing business, reduce the cost of doing business and implement the sector reforms required for businesses to invest, expand and compete internationally.
This is how infrastructure delivers its greatest economic value. Not because more concrete is poured. But because more enterprises succeed.
As these enterprises grow, they attract new private investment, create employment, expand exports, improve productivity and broaden the country’s tax base through stronger economic activity.
The Fund also has the opportunity to recycle capital rather than permanently deploy it.
As enterprises mature, strategic operators can be introduced, and investments progressively realised through the Nairobi Securities Exchange, Infrastructure REITs, asset-backed securities and other capital market instruments. Successful exits recycle capital into the next generation of projects while giving institutional investors confidence that investments can be originated, developed and successfully realised.
Each successful exit makes the next generation of funds easier to raise.
The story of the National Infrastructure Fund can perhaps best be understood through its own origin.
The Fund has been seeded from the partial monetisation of just two successful Kenyan enterprises, Safaricom PLC and Kenya Pipeline Company.
If, over time, it consistently develops two nationally significant enterprises each year, brings them to Financial Close, transforms them into commercially successful businesses and ultimately recycles them through Kenya’s capital markets, Kenya will have converted the proceeds from today's national champions into a perpetual engine for creating tomorrow’s.
That, in my view, is the true promise of the National Infrastructure Fund.
It is not simply an institution for financing infrastructure.
It is an institution that aligns Government, investors, operators and customers around the sustained growth of commercially successful enterprises.
These nationally and regionally significant enterprises become the economic anchors around which thousands of large, medium and small businesses invest, innovate and expand. As these anchor enterprises grow, they stimulate investment across entire value chains, from manufacturers, service enterprises, exporters and logistics companies to hotels, technology firms, suppliers, farmers and countless other businesses that depend upon world-class infrastructure and competitive markets.
In this way, the National Infrastructure Fund crowds capital not only into infrastructure but into the wider economy. By removing strategic bottlenecks, improving the ease and cost of doing business and coordinating the reforms that allow enterprises to flourish, it creates the confidence for private investors to commit capital at a scale that would otherwise not be possible.
The result is a virtuous cycle. Stronger enterprises attract more investment. More investment creates more jobs, higher productivity and greater exports. A larger, more competitive private sector naturally expands the country’s tax base, strengthening public finances through economic growth rather than higher taxation.
If executed with commercial discipline, strong governance and a relentless focus on enterprise value, the National Infrastructure Fund has the potential to become one of Kenya’s most important economic institutions.
Its greatest legacy will not simply be the infrastructure it finances. It will be the nationally and regionally competitive enterprises it creates, the industries they anchor, the private investment they catalyse and the expanded productive capacity they leave behind. Those enterprises, rather than the infrastructure itself, will become the enduring foundation of Kenya’s long-term prosperity.
