Ruto's ambitious Sh5 trillion fund plan gets Cabinet nod

 

President William Ruto attended a church service at AIPCA Karure Church in the Gatundu North Diocese, Kiambu County. [PCS]

President William Ruto’s Cabinet on Monday evening approved the creation of two major state investment vehicles—a National Infrastructure Fund and a Sovereign Wealth Fund—aimed at mobilising up to Sh5 trillion for long-term development, even as experts questioned their governance and economic rationale.

The decision advances President Ruto’s newly announced strategy to shift Kenya toward an investment-led economic model, reducing reliance on debt and taxes to finance infrastructure.

The National Infrastructure Fund will be established as a limited liability company, a structure designed to operate with commercial independence, while the Sovereign Wealth Fund will manage windfall revenues from minerals, petroleum, and state asset sales.

A sovereign wealth fund (SWF) is a state-owned pool of money, typically funded by surplus revenues from newfound resources like oil or minerals, aimed at saving for future generations or stabilising the national budget. Kenya’s version will have three components: a stabilisation fund to cushion budget shortfalls, a development fund for infrastructure, and a savings fund for intergenerational equity—a principle of fair resource use across current and future citizens.

A presidential dispatch from State House issued after the President presided over a Cabinet meeting stated the Sovereign Wealth Fund is "anchored on inter-generational savings, protection against external shocks and strategic investments with commercial returns," and said it "operationalises Article 201 of the Constitution on inter-generational equity."

The National Infrastructure Fund, structured as a limited liability company, is, on the other hand, intended to function like a commercial entity.

The Cabinet described it as "the central engine for aligning the (Ruto) administration’s financial resources with national development priorities."

This legal format separates its finances from the government’s balance sheet, potentially allowing it to raise capital independently.

The government estimates each shilling invested through the infrastructure fund could “crowd in”—or attract—up to Sh10 from private investors. "Every shilling invested through the Fund is expected to crowd in up to KSh10 additional shillings from long-term investors," the Cabinet stated.

Financial analysts and economists have raised concerns, as detailed in a previously reviewed draft bill, about the design of the funds. Deepak Dave of Autonomi Capital earlier called the SWF a “luxury for rich countries” and said Kenya’s volatile revenues would be better spent directly on public services or debt reduction.

Another key worry is governance. The draft bill placed significant withdrawal power with the Cabinet Secretary, with limited oversight from the fund’s board or parliament. “I see no discretion for the Board to refuse the transfer? And nothing about notification to Parliament?” Dave noted in an interview with The Standard earlier that the fund could become a “slush fund” for short-term political needs.

The limited liability model for the infrastructure fund, while promising operational agility, also raises questions from experts.

The Cabinet, however, said both funds "will be professionally and independently managed under clear governance, transparency and accountability frameworks," with the infrastructure fund "overseen by a competitively appointed Board and CEO." However, specifics on appointments and oversight remain undefined.

The Cabinet outlined ambitious targets anchored by the new funds. "Together, the Sovereign Wealth Fund and the National Infrastructure Fund will finance Kenya’s transformation agenda," the dispatch read, focusing on food security, transport, and energy.

Specific goals include "the construction of 50 mega dams, 200 mini-dams and over 1,000 micro-dams," and expanding transport via "the dualling of 2,500km of highways and the tarmacking of 28,000km of roads." The energy plan involves adding "at least 10,000 megawatts of new capacity over the next seven years."

The policies now move toward operationalisation, requiring legal frameworks, board appointments, and capitalisation. The Ruto government plans to seed the funds through "strategic monetisation of mature public assets" and directing "revenues from mineral and petroleum resources, dividends from public investments and a portion of privatisation proceeds" into the Sovereign Wealth Fund.

This would see proceeds of the sale of parastatals and state-owned utilities such as Kenya Pipeline Company and Safaricom into the fund.

However, with Kenya’s public debt exceeding Sh11 trillion, experts continue to ask whether launching new funds is prudent before addressing existing fiscal pressures.