Kenya's National Infrastructure Fund has begun deploying its Sh340 billion seed capital by purchasing domestic government bonds. This move aims to free up bank liquidity and generate returns for future infrastructure projects. According to James Mworia, the fund's chief executive, the purchases started in July and target securities held by banks and other investors.
The goal of this investment is to release liquidity for commercial banks to lend to businesses and households. The fund intends to invest the full Sh340 billion by the close of the financial year in June 2027. This amount represents roughly one-third of Kenya's domestic borrowing target for the current fiscal year. The investment in government bonds is a strategic move to mobilize funds for future projects.
The bond portfolio is projected to generate about Sh42 billion annually. This return will be used as part of a broader strategy to mobilize Sh3.6 trillion over the next decade through debt and co-investment. The National Infrastructure Fund will channel future returns into commercially viable projects across various sectors, including energy, transport, logistics, ICT, water, and agriculture.
The fund will seek co-investors from Kenya and abroad for these projects. The initial capital for the fund was sourced from the privatization of Kenya Pipeline Company and the partial sale of the government's stake in Safaricom. This marks a significant step in the development of Kenya's infrastructure.
The National Infrastructure Fund's creation follows the National Infrastructure Fund Act, signed into law in March 2026. The act aims to provide a long-term financing platform and reduce reliance on sovereign borrowing amid high debt-service pressures. These pressures currently consume about 40% of the government's revenue.
The government plans to use the National Infrastructure Fund to acquire a stake in the proposed Dangote-led refinery in Lamu County. However, details of the investment size have not been disclosed. This investment is part of the fund's strategy to support large-scale infrastructure projects.
The deployment of the Sh340 billion seed capital is a significant milestone for the National Infrastructure Fund. The fund's strategy to invest in government bonds and co-invest in infrastructure projects is expected to have a positive impact on Kenya's economy. The fund's success will depend on its ability to mobilize funds and invest in viable projects.
Key points
- The National Infrastructure Fund aims to invest Sh340 billion in domestic government bonds by June 2027.
- The bond portfolio is projected to generate Sh42 billion annually.
- The fund seeks to mobilize Sh3.6 trillion over the next decade through debt and co-investment.
