Kenyan President William Ruto has unveiled plans to establish a sovereign wealth fund alongside an infrastructure fund, a move aimed at attracting investment into critical sectors while steering the country away from another debt spiral that has burdened public finances. Over the past decade, Kenya’s drive for large-scale infrastructure has come at a steep cost, propelling its debt service-to-revenue ratio to one of the highest levels on the continent. Ruto’s new strategy seeks a more sustainable path, one rooted in mobilising domestic capital and unlocking the value of state assets.
Under a recently enacted privatisation law, the government will begin selling stakes in select state-owned enterprises, starting with the Kenya Pipeline Company, which oversees the transport of petroleum products nationwide and across regional borders. The president estimates that the sale could yield up to 130 billion Kenyan shillings, roughly one billion dollars, to seed the two funds. The infrastructure fund will channel investments into agriculture, the lifeblood of Kenya’s economy, to enhance productivity and boost exports. It will also support power sector expansion, with current generation capacity at about 2,300 megawatts and an additional 10,000 megawatts required to sustain the country’s industrial ambitions.
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Kenya’s pivot comes amid mounting pressure to contain public debt. The National Treasury’s 2023 Annual Public Debt Report shows that total public debt service consumed 58.8 percent of ordinary revenue in the 2022–2023 fiscal year, up from 47.9 percent the previous year. Interest payments alone accounted for 33.8 percent, divided between domestic and external obligations. The Central Bank of Kenya reported that external debt represented half of this total, leaving the economy vulnerable to currency volatility as the shilling depreciated beyond 160 per dollar in early 2025.
To manage these pressures, the government issued a 1.5-billion-dollar Eurobond in October 2025, split across seven- and twelve-year tenors, to refinance short-term obligations. Although the move extended maturities, it also underscored the strain that still defines Kenya’s borrowing landscape.
Kenya’s Sovereign Wealth Fund Bill
The foundation of Kenya’s new financial architecture lies in the Draft Kenya Sovereign Wealth Fund Bill of 2019, which set out the structure, governance, and purpose of the sovereign wealth framework. While still awaiting full implementation, its provisions underpin the legislative reforms now being advanced by the current administration.
The Bill establishes a multi-tier framework comprising a Stabilisation Fund, designed to cushion the national budget during periods of revenue shortfall; an Infrastructure and Development Fund, intended to finance strategic public projects; and an Urithi or Future Generations Fund, conceived as a long-term savings mechanism for intergenerational equity. The National Treasury is designated as the trustee of the Fund, while the Central Bank of Kenya serves as custodian and investment manager, ensuring that fund operations remain shielded from political interference.
The law also mandates annual audits by the Auditor-General, parliamentary oversight, and adherence to international best practice through the Santiago Principles that guide sovereign wealth fund governance globally. By embedding these principles, the new funds are intended to operate not as off-budget entities but as disciplined state investment vehicles grounded in transparency and fiscal prudence.
Building the Engine of Self-Reliance
Under the 2025 reform plan, the sovereign wealth fund and the infrastructure fund will be capitalised through privatisation proceeds and state asset revaluation. The Privatisation Act of 2023 authorised the sale of selected parastatals, beginning with the Kenya Pipeline Company. Parliament approved the sale of up to sixty-five percent of KPC’s shares, while the state will retain thirty-five percent ownership. The transaction is expected to generate between one hundred and one hundred and thirty billion shillings, equivalent to roughly one billion dollars.
A share of the proceeds will flow into the sovereign wealth fund for long-term investment, while the remainder will seed the Kenya Infrastructure Fund, a vehicle focused on financing agricultural modernisation, energy expansion, and industrial corridors. Agriculture contributes about twenty-two percent of Kenya’s GDP and employs nearly seventy percent of the rural population, yet productivity growth has stagnated below three percent annually. The new fund seeks to reverse that trend by investing in irrigation, value-addition hubs, and export-driven processing zones.
Kenya’s energy mix remains diverse, with geothermal sources contributing 25.9 percent of total generation, followed by hydro at 24 percent, thermal at 17.2 percent, solar at 14.1 percent, wind at 12 percent, bioenergy at 4.5 percent, and off-grid systems accounting for about 2.3 percent. The government’s ambition to add 10,000 megawatts of new capacity by 2035 aligns squarely with the Vision 2030 industrialisation agenda. In 2024, the Climate Investment Funds committed 300 million dollars to strengthen the national grid and expand geothermal production, reinforcing the country’s broader drive toward sustainable, domestically powered growth.
Globally, sovereign wealth funds have evolved into instruments of macroeconomic resilience. Their total assets stood at about 12.4 trillion dollars in 2024, with increasing allocations towards infrastructure, clean energy, and innovation. Across Africa, countries such as Nigeria, Angola, and Botswana operate such funds, though most rely on resource revenues.
Kenya’s model is distinctive because it is not underpinned by oil or mineral wealth. Instead, it is built on the monetisation of state assets, privatisation receipts, and domestic savings. The country’s pension sector, valued at 1.7 trillion shillings, represents a deep pool of long-term capital that can be channelled into these funds under well-structured public-private arrangements. If managed effectively, the model could offer a template for other African nations seeking fiscal stability without commodity dependence.
The Tightrope of Promise and Peril
The promise of these funds is considerable, yet the risks are equally profound. Valuation remains a critical issue. The Parliamentary Finance and Planning Committee has called for complete disclosure of contingent liabilities associated with the Kenya Pipeline Company, including approximately 5.75 billion shillings in legal claims. Any mispricing or understatement of liabilities could compromise investor confidence and reduce net proceeds.
Governance risk is another concern. The 2019 Bill prescribes annual audits, parliamentary scrutiny, and independent management structures, but the practical enforcement of these provisions will determine success. Kenya’s history with public enterprises has often been marred by political influence, making institutional independence essential.
Macroeconomic pressures persist. Debt service obligations for the 2024–2025 fiscal year are projected to exceed 1.45 trillion shillings, nearly sixty percent of projected revenue. The Treasury anticipates this ratio will decline to about forty-five percent by 2027, but that outcome depends heavily on sustained economic growth of five percent and improved tax performance.
Market volatility adds another layer of uncertainty. Global risk aversion and high interest rates may challenge Kenya’s capital mobilisation strategy, delaying privatisations or suppressing valuations. Political factors also loom: should fund resources be diverted to short-term or electoral objectives, the model could lose both credibility and momentum.
Can Kenya Reclaim Fiscal Balance?
If executed with discipline, Kenya’s sovereign wealth and infrastructure funds could mark a turning point in public finance. By converting state assets into productive capital, the government hopes to move from borrowing for growth to investing for sustainability. Anchoring the funds in the legal framework of the 2019 Bill provides institutional legitimacy, while directing privatisation proceeds into self-sustaining pools of investment represents a structural shift in fiscal strategy.
Success will depend on credible valuation of state assets, transparent fund management, macroeconomic stability, investor confidence, and strict adherence to international principles of sovereign wealth governance. If these elements align, Kenya could create a durable foundation for generational wealth and reduce its exposure to debt shocks.
Failure, however, would be costly. Weak oversight, poor asset pricing, or political interference could quickly erode public trust and turn the funds into symbolic gestures rather than engines of transformation. The margin for error is narrow.
Between Reform and Risk
Kenya’s sovereign wealth and infrastructure funds embody both ambition and necessity. They aim to convert state assets into capital engines that generate growth while lessening the country’s reliance on borrowing. Yet their success will hinge on transparency, competence, and a disciplined separation between politics and financial management.
For President Ruto, this initiative represents a critical test of economic stewardship. A successful implementation could redefine Kenya’s fiscal trajectory and set a benchmark for other African economies. But if mismanaged, it could entrench the very vulnerabilities it seeks to resolve.
Kenya is not merely experimenting with financial innovation; it is attempting to rewrite the rules of national investment. The coming years will reveal whether this experiment becomes a model of fiscal maturity or a warning of how ambition can falter without accountability.
