How Kenya plans to attract private investors through National Infrastructure Fund

Kenya's National Infrastructure Fund (NIF) is set to become a long-term investment vehicle, rather than a conventional government spending program, with new rules requiring at least a 7 percent equity return on infrastructure investments. The National Infrastructure Fund Investment Policy, detailed in Sessional Paper No. 7 of 2026, outlines how the fund will invest in major infrastructure projects and manage its portfolio.

This policy aims to attract private investors, pension funds, and international infrastructure financiers, reducing reliance on public debt for commercially viable projects. The fund will seek to generate commercial income from projects, with investments expected to meet a minimum return threshold of 7 percent. Unlike traditional infrastructure bonds that pay a fixed coupon, the NIF will invest as an owner or investor in projects seeking long-term commercial returns.

The policy sets strict limits on project financing, with no single project allowed to receive more than 20 percent of the fund's assets, and sector exposure limited to 40 percent of total fund assets. Projects must also be able to raise at least 60 percent of their financing through non-recourse project debt, which relies on the project's own assets and cash flows for repayment.

The fund will invest through various financing structures, including direct investments, equity, quasi-equity, debt instruments, project finance structures, special purpose vehicles, infrastructure funds, pooled investment vehicles, co-investment platforms, and capital market instruments. The government aims to finance commercially viable infrastructure using a mix of public and private capital, potentially reducing the need for direct government borrowing for revenue-generating projects.

President William Ruto sees the NIF as a groundbreaking initiative for Kenya's infrastructure development, promising long-term investment in roads, railways, dams, energy infrastructure, and airport expansion. The policy's strict rules on project financing and sector exposure are designed to preserve capital while allowing the fund to diversify across multiple infrastructure sectors.

However, the success of the NIF will depend on strong project selection, governance, and risk management, as infrastructure investing typically involves construction, regulatory, revenue, and long investment periods. The National Assembly has invited public submissions on the proposal, which are due by August 24, 2026.