The Cabinet has approved the establishment of a Ksh5 trillion National Infrastructure Fund, marking a major milestone in Kenya’s long-term plan to accelerate economic growth and position the country as a first-world economy.
Through a Cabinet Dispatch on Monday, December 15, the government also announced that the Sovereign Wealth Fund was approved as part of efforts to mobilise local sources to improve the country's financial standing.
The National Infrastructure Fund was approved as a limited liability company and will act as an engine for mobilising and deploying capital into infrastructure projects, which are high priority.
"Approved as a limited liability company, the National Infrastructure Fund will serve as the central engine for aligning the administration's financial resources with national development priorities," the dispatch read.
Unlike traditional taxation, the two national development funds will use creative financing by tapping into domestic resources, selling mature public assets, and deploying national savings, while also attracting foreign investors through capital markets.
Under the new framework, all proceeds from privatisation will be strictly set aside for infrastructure investment.
Through the Sovereign Wealth Fund policy, there will be a structured framework for managing revenues from mineral and petroleum resources, dividends from public investments and part of privatisation proceeds.
Specifically, the Sovereign Wealth Fund is designed to strengthen fiscal discipline and enhance long-term economic resilience, with the government looking at an inter-generational savings approach to preserve national wealth.
The two funds will support Kenya’s development by boosting food security, improving transport and logistics, and expanding energy for industry and the digital economy.
In a bid to boost food security, the government aims to construct 50 mega dams, 200 mini-dams and more than 1000 micro dams to bring an additional 2.5 million acres under irrigation in what will be a major boost for rural livelihoods.
As far as transport and logistics are concerned, infrastructure will be expanded through the dualization of the 2500km of highways. About 28,000 kilometre of the roads will also be tarmacked, while the Standard Gauge Railway will be extended to Malaba.
The government also plans to expand oil pipelines, while airports and ports of Mombasa and Lamu will undergo revamps to match modern, first-world standards.
In the energy sector, the government plans to add at least 10,000 megawatts over the next seven years to power manufacturing, digital expansion, e-mobility and emerging technologies by properly leveraging on Kenya's geothermal, hydro, solar, wind and nuclear potential.
The two funds will be professionally and independently managed under strict governance, with the National Infrastructure set to be overseen by a competitively appointed board and chief executive officer. The Sovereign Wealth Fund, meanwhile, will operate under a robust policy structure.
