Ruto's China-Singapore model sets Kenya on path to first world status

President William Ruto launches construction of the Rironi-Mau Summit Road in Gilgil, Nakuru County, on November 28, 2025. [PCS]

During the French Revolution of 1789, Emmanuel Joseph Sieyès famously wrote about the third estate, the vast majority of society that was ignored and exploited despite carrying the greatest burden of economic and social life. This historical imagery later inspired French demographer Alfred Sauvy, who in 1952 coined the term 'Third World', drawing directly from Sieyès by likening poor and marginalised countries to the third estate of revolutionary France

The term gained prominence at the 1955 Bandung Conference during the Cold War era, when the world was divided between Western capitalist 'First World' countries and Soviet-led communist 'Second World' states. 'Third World' came to describe countries that were economically disadvantaged, politically sidelined, and treated with contempt by wealthier powers, yet possessed the agency and potential to overcome their circumstances.

Seventy years after Bandung, President William Ruto has seemingly revived this debate. On November 21, 2025, during his State of the Nation address, he declared he was putting in place mechanisms to move Kenya from a 'Third World' to a 'First World' country. Following this announcement, he has since taken two steps. That same day, he signed into law the Government Owned Enterprises Act (GOE) and, two weeks later, his cabinet approved the National Infrastructure Fund (NIF) and the Sovereign Wealth Fund (SWF).

Now, a critical examination of the two steps taken by President Ruto, and his incessant calls to make Kenya another Singapore, invites us to review the development path taken by both Singapore and China.

The GOE Act and lessons from Singapore

In our view, the Government Owned Enterprises Act borrows from Singapore's state capitalism, particularly in how the state separates ownership, policy, and regulation. Under the Act, the National Treasury acts as shareholder on behalf of the government, while line ministries focus on sector policy. GOEs are required to operate on commercial principles, with boards dominated by independent directors and CEOs competitively recruited. This mirrors Singapore's long-standing approach where the government is not involved in day-to-day management of state enterprises, allowing firms to compete in the market while advancing national development goals.

The Act ensures that, just like in Singapore, boards are appointed strictly on merit, political interference is minimal, and performance is judged against global benchmarks. This means government owned enterprises will be subjected to performance contracts, financial transparency, independent audits, and clear profitability expectations. While ownership remains directly with the National Treasury rather than through a single holding company, like Singapore's Temasek Holdings and GIC, the principle is the same: separate the shareholder function from operational management, insulate enterprises from political interference, and demand commercial performance.

It is worth noting that some critics of this move have focused only on the weaknesses of this Act ignoring its potential. In truth, institutional maturity and insulation from politics are at the center of its success. The signing into law of the GOE Act is a step in the right direction and deserves applause, even as we call for its full implementation to build credibility.  If fully implemented, Kenya's framework positions GOEs more like Singapore's enterprises.

NIF and Lessons from China

On the other hand, the National Infrastructure Fund aims to mobilise Sh 5 trillion for infrastructure without raising taxes or public debt. Asset monetisation, including Kenya Pipeline Company valued at Sh100 billion and the Safaricom stake at approximately Sh244 billion, will provide seed capital to attract 10 times from pension funds and development finance institutions. This investment approach departs from the debt-tax-austerity cycle to address Kenya's longstanding infrastructure gap. Targets include 10,000 plus kilometers of roads, 10,000 MW of energy capacity, SGR extension to regional connections, port and airport modernization, and irrigation systems. Improved infrastructure will reduce logistics costs, which consume 20-25 per cent of product costs in developing economies compared to 8-10 per cent in advanced economies.

Arguably, the NIF partly mirrors China's infrastructure financing model, particularly its state-coordinated approach. China's model operates through a networked system of four key components. First, policy banks like the China Development Bank and Export-Import Bank of China offer long-term financing at below-market rates. Second, state-owned enterprises such as China Railway Construction Corporation and China Communications Construction Company build railways, ports, highways, and bridges domestically and internationally. Third, Local Government Financing Vehicles allow provincial and municipal governments to borrow against land and state assets to finance local infrastructure. Fourth, specialised funds like the China-Africa Development Fund catalyse investment.

This state-coordinated network across ministries, banks, and enterprises enabled China to build more infrastructure in three decades than most countries achieve in a century. Kenya's approach differs by using privatisation proceeds and voluntary private investment rather than land-backed borrowing and captive state banks but shares China's ambition for infrastructure-led development.

The NIF also draws from other global best practices. Singapore's Temasek Holdings has grown government assets from S$354 million in 1974 to over S$400 billion today. Australia's Future Fund started with A$60.5 billion from privatising Telstra in 2006 and grew to A$162.6 billion by 2019. The UAE's Mubadala manages $330 billion in assets, focusing on infrastructure, energy, and digital networks. Kenya is taking a similar dual approach. The NIF will finance immediate infrastructure projects while a companion Sovereign Wealth Fund preserves a portion of privatisation proceeds and resource revenues for future generations.

Learning from China's Struggles

China's model worked with low initial debt, 8-10 per cent annual growth, rising land values, and a competitive fiscal capacity. Today, Local Government Financing Vehicles (LGFVs) in China hold 59 trillion yuan in debt (50 per cent of GDP), with total government and LGFV debt rising from 40 per cent to 95 per cent of GDP between 2012 and 2022. Many projects generate inadequate returns, requiring continuous refinancing or bailouts. Chinese authorities now identify local government debt as a top economic risk.

However, it is important to note that Kenya's context differs. Where China began with minimal debt and massive domestic savings, Kenya faces Sh12 trillion in debt. Where China could absorb project failures through fiscal strength, Kenya depends on external creditors. Where China's authoritarian system directed state banks to provide patient capital, Kenya operates within a constitutional democracy that obliges transparency and parliamentary oversight.

Concerns

Given the difference in the context of the democratic space that Kenya, Singapore and China operate under, a number of Kenyan legal experts have raised constitutional concerns. Noting that Kenya's Constitution recognises only three public funds, namely, the Consolidated Fund, Contingencies Fund, and Equalisation Fund, critics worry that the LLC structure bypasses these safeguards and avoids parliamentary oversight. At the same time, the Privatisation Act requires asset sale proceeds go to the Consolidated Fund, creating potential conflicts. Reports indicate the Treasury is establishing the fund without specific legislation, which critics argue undermines governance and accountability for what could become a fund managing hundreds of billions of shillings.

However, the point is to strategically adapt where conventional provisions stagnate the country's growth. Critics should consider the positives. First, a limited liability protection will attract institutional investors as the corporate form insulates the fund from political interference and bureaucratic red tape, which continues to plague traditional parastatals. According to World Bank analysis, professionally managed infrastructure funds deliver projects faster than standard government procurement systems. Second, an LLC model allows flexible deal arrangements to crowd in private capital while tapping Kenya's Sh 2.23 trillion in pension savings that desperately need long-term, inflation-linked investment opportunities. Most importantly, the LLC form enforces commercial discipline. Boards and management become accountable for returns, not political patronage. This directly addresses President Ruto's observation that past privatisations produced no enduring assets by ring-fencing proceeds strictly for infrastructure.

Ticket to 1st world?

The question remains: how would this transition Kenya from third world to first world? First, quality transport networks reduce logistics costs that currently consume 20-40 per cent of product costs in East Africa, making Kenyan goods competitive globally. Research shows that every 1 per cent increase in infrastructure quality reduces trade costs by 0.71 per cent, translating to annual GDP growth of 0.21-0.99 per cent for developing countries. Modern ports and reliable electricity attract foreign investment that currently flows to Vietnam and Bangladesh. Kenya loses manufacturing deals to these countries despite available and quality labour because unreliable power and port delays make production unpredictable. Infrastructure, therefore, enables workers to move from subsistence agriculture into manufacturing and services.

South Korea's experience proves this works. After the Korean War, only 2.3 per cent of roads were paved, but, by 2011, 80 per cent were paved and Korea had built Incheon International Airport and Busan Port, the world's fifth largest container port. This infrastructure enabled transformation from war-torn poverty to OECD membership within one generation. Kenya has advantages Korea lacked, including abundant natural resources, a larger domestic market, and strategic geography connecting East and Central Africa. Infrastructure gaps, not capability, constrain transformation.

This is arguably the boldest economic policy innovation Kenya has attempted since independence. With proper management and institutional discipline, the NIF creates conditions for Kenya to leapfrog decades of underdevelopment.

Otiato is a political scientist and holds a master’s degree in international trade law, University of Turin, Italy.

Boyani is a political scientist and a PhD candidate on policy discourse in platform and global governance, University of Passau, Germany.