Kenya Moves to National Funds to Jumpstart Infrastructure Spending
Kenya has approved the creation of two national infrastructure funds with a combined target of KSh5 trillion (about $38.7 billion) to finance infrastructure projects, including roads and power plants.
The government aims to attract private capital while reducing reliance on borrowing and taxation to fund priority programs. This move comes as Kenya grapples with one of Africa’s highest debt-to-revenue ratios after years of heavy borrowing to support infrastructure.
In response to budgetary pressures, authorities have implemented tighter fiscal measures, including tax increases. Public protests over new levies prompted revisions to the 2024/2025 Finance Act and a September 2024 audit of public borrowing. Against this backdrop, the state is pursuing alternative financing mechanisms to sustain infrastructure investment without exacerbating fiscal stress.
Under the new framework, the funds will be financed from mineral and petroleum revenues, dividends from public investments, and a portion of privatisation proceeds.
The transport sector highlights the funding gap, with several long-planned projects stalled due to financing constraints. These include the extension of the Standard Gauge Railway (SGR) to Uganda, the expansion of Nairobi’s Jomo Kenyatta International Airport (JKIA), and numerous road construction initiatives nationwide.
Nonetheless, the government recently launched Phase 1 of the Gilgil–Nakuru–Mau Summit highway dual carriageway in early December, marking a notable milestone despite ongoing funding challenges. The initial phase had faced years of delays after earlier financiers withdrew, underscoring the risk environment the new infrastructure funds aim to mitigate.
— Henoc Dossa
