NAIROBI: THE economic situation in Kenya is less stable than it was in the past, as the country prepares for the 2027 elections. This scenario is predicated on a comprehensive examination and detailed analysis of the repercussions of decisions, which, from an economic standpoint, indicate that the situation on the ground is precarious, particularly with respect to the implementation of the envisaged critical strategic projects.
This pertains particularly to the infrastructure development funds and the proposed sovereign fund for Kenya’s future. The current legal crisis is evident in the failure to establish the status of funds already proposed.
This failure to adapt to the challenging situation of serving Kenyans is indicative of the country’s economic situation, which might make it very difficult to achieve the Sustainable Development Goals (SDGs), let alone serve Kenyans.
An examination of the media group in Kenya indicates that around December 2025, a High Court in Kenya received an application to halt the implementation of the proposed national infrastructure fund, as the source reports (for details, read Daily Nation 15/12/2025), noting that the fund was created without the approval of the Parliament of Kenya.
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It is my understanding that Kenyans will not appreciate these matters being made public or discussed openly. However, the majority of Kenyans will recognise that making these matters public will show where those who are supposed to serve Kenyans are going wrong and demonstrate that there are Kenyans with the intelligence to analyse the Kenyan government’s actions.
Many don’t realise that even before it is fully operational, the National Infrastructure Fund (often referred to as the KSh5 trillion National Infrastructure Fund proposed under President William Ruto) has faced significant challenges in functioning as an effective investment vehicle for public, bankable infrastructure projects.
As an economist and analyst, I am of the opinion that it has been unable to fulfil its stated objectives due to a combination of structural, legal, governance, investorconfidence and project-preparation challenges.
The economic aspect will be the primary focus of my analysis of the reasons for the fund’s failure to take off, with a limited examination of the ongoing rhetoric and statements by political aspirant leaders competing to secure various positions in the 2027 elections. My analysis has identified one of the most fundamental issues as the Fund’s legal foundation.
After the Cabinet approved the creation of the NIF in December 2025, the High Court issued conservatory orders halting its rollout, ruling that establishing the fund without parliamentary legislation could be unconstitutional.
A deep dive found that the establishment of the funds bypassed the required public finance laws and weakened safeguards for public funds. Until this constitutional challenge is resolved, the fund’s development, including capitalisation and operations, will, in my view, remain legally frozen, thereby undermining its credibility and bankability. Further analysis indicated a significant trust deficit among political actors, investors and the public.
In fact, the learned brothers I spoke to in Nairobi during face-toface interviews indicated that the Fund’s proposed structure, established as a limited liability company rather than a statutory public fund, risks reducing parliamentary oversight and accountability, raising fears that it could operate off the radar and without sufficient checks on executive power, which may suggest a weakening of confidence among institutional investors and civil society.
Beyond trust, Kenya has historically struggled to structure infrastructure projects to attract long-term institutional capital. Experts, speaking on condition of anonymity, said that weak project preparation, including inadequate feasibility studies, unclear land rights, weak revenue models and risk-mitigation plans, makes it hard to make projects bankable for pension funds, insurers or international investors.
This observation is clear: Having advised on major strategic projects in the past for some companies seeking funding, without a pipeline of well-structured, revenue-generating projects, the Fund cannot attract private capital at a scale sufficient to enable Kenya to better serve its people.
But more importantly, the establishment of funds is prone to failure because Kenya’s broader fiscal environment, characterised by high public debt and strained budgets, complicates infrastructure financing. Government borrowing has historically funded infrastructure, but rising debtservice costs are constraining fiscal space for new projects and deterring investors from taking on additional risk, particularly when the state is perceived as financially constrained, as the World Bank’s earlier assessment indicates.
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While rising debt-service costs are constraining fiscal space due to past governance challenges in Kenya’s public finance and asset monetisation efforts (e.g., controversial sales of state assets, such as a Safaricom stake), there’s scepticism about the transparency of capital flows into the Fund and whether proceeds will be used efficiently and in the public interest.
I am not entirely sure about other economists, but in my assessment, this political and public uncertainty further deters institutional long-term capital from committing. In fact, critical analysis of the hybrid nature of the fund, blending public seed capital with private and institutional investment, requires clear legal frameworks, governance rules, risk-sharing mechanisms and safeguards for public assets.
The absence or ambiguity of these foundational elements has hindered progress, leaving the initiative more of an idea than a fully established investment structure capable of executing large projects. In essence, if asked, I would state that the Fund has failed to date, not because the concept is inherently unworkable, but because its legal basis is contested, governance and oversight frameworks are unclear, there are trust deficits, and Kenya lacks a strong pipeline of investment-ready infrastructure projects.
Before the National Infrastructure Fund can effectively mobilise significant long-term capital into bankable public infrastructure, it must address these structural and institutional challenges. I am available to provide a summary of successful structures used by analogous funds in other countries, if you would like. Kenya’s investment fund is underperforming, as evidenced by credible sources.
By learning from others, they could have improved their performance and avoided the controversy surrounding the implementation of the proposed fund. To assist Kenya, I will teach Kenyans by providing a list of countries in which such a fund has been established and is currently operational. This will enable Kenya to learn from these countries and better serve the majority of Kenyans.
In India, the National Investment and Infrastructure Fund was established in 2015 as a quasi-sovereign wealth fund. The Government of India serves as an anchor investor (minority stake), with the majority of capital from global institutional investors (e.g., ADIA, Temasek). The fund operated through professionally managed subfunds (Master Fund, Fund of Funds, Strategic Opportunities Fund).
A lesson for Kenya: Anchor public capital, strong governance and global co-investors build credibility. In Nigeria, the Sovereign Investment Authority manages the Nigeria Infrastructure Fund, one of three sovereign wealth funds.
The fund operates under a dedicated sovereign wealth act and invests in commercially viable domestic infrastructure projects, such as toll roads and healthcare facilities. A Lesson for Kenya: Legal clarity and a disciplined commercial focus are essential. In South Africa, the Public Investment Corporation manages public-sector pension funds and invests a portion of these funds in infrastructure through structured vehicles and partnerships. It operates as a regulated asset manager with fiduciary responsibility.
A Lesson for Kenya: Pensionbacked infrastructure requires strong fiduciary safeguards and credible returns. Likewise, the UK Infrastructure Bank, a governmentowned policy bank established by legislation, was mandated to support infrastructure and the net-zero transition.
This bank used loans, guarantees, and equity investments. A lesson for Kenya: A clear mandate, independence and a catalytic capital approach.
Canada Infrastructure Bank: Canada had a federal Crown corporation established by law. It uses public funds to de-risk projects and attracts private investors, with a focus on clean power, transportation and broadband. Lesson for Kenya: Infrastructure funds must operate as disciplined investment institutions rather than as government spending agencies.
Across these cases, five consistent pillars are evident. Kenya should know that such funds cannot be classified as a homestead budget. Instead, a strong legal foundation is established through legislation, not executive directives; professional, independent governance shielded from political interference; a clear commercial mandate, focused on revenue-generating, bankable projects; and robust project preparation facilities, with feasibility studies and risk mitigation undertaken before investment.
For Kenya, the key takeaway is that infrastructure funds succeed when they act first as investment institutions and second as policy instruments. Without legal certainty, investor-grade governance, and a credible pipeline of de-risked projects, such funds will struggle to attract long-term institutional capital, and the venture will not be a good one for Kenyans.