President William Ruto chairs a Cabinet meeting at State House, Nairobi, on December 15, 2025.
Many readers of this column who are uninitiated in the subject of corporate governance may not have appreciated the significance of one detail emphasised in Monday’s Cabinet dispatch from State House: that the soon‑to‑be‑established National Infrastructure Fund will be a limited liability company.
In my view, if this intention is carried through in practice, it would be a good starting point. For the truth of the matter is that it is foolhardy to imagine that a National Infrastructure Fund—an entity expected to sit on hundreds of billions of shillings and touted as the next game‑changer for Kenya—can be run under the existing corporate governance regime for state‑owned enterprises.
If the government is serious, it must make the Fund a limited liability company. Only then can it insulate the Fund from the medley hands of Harambee House‑based bureaucracies that behave as though ultimate power over parastatals resides with them. If the Fund is to succeed, entities such as the Inspectorate of State Boards, the State Corporations Advisory Committee and even the so‑called Efficiency Monitoring Unit must be kept very far away.
A serious national infrastructure or sovereign investment fund—one capable of crowding in international investors—must be insulated from the governance regime anchored in the ancient and primordial concept of the “parent ministry”, a notion that has long outlived its usefulness. This route has been exploited to the point that Cabinet Secretaries and Principal Secretaries now demand a say in the appointment of even junior managers in parastatals.
Conflict of interest
If the government truly intends to make the Fund a limited liability company, it must also be prepared to abandon the nonsensical practice of stuffing boards of state‑owned enterprises with so‑called ex‑officio members. This practice reeks of conflict of interest. I have seen many instances where ministers later purport to hold parastatal executives to account for decisions, while conveniently ignoring the fact that their own ex‑officio representatives participated in those very decisions.
What is more, the appointment of these ex‑officio members is arbitrary. The Attorney‑General picks and chooses where to sit or be represented. Why does the Attorney‑General sit on the board of the Kenya Ports Authority but not on the boards of other parastatals? Why does the Solicitor‑General sit on the board of the Kenya Pipeline Company and not elsewhere? There is no rhyme or reason.
I belabour this point deliberately. On the same subject of limited liability companies, let us not forget that last month President Ruto assented to the Government Owned Enterprises Bill, whose centrepiece is the concept of corporatisation—turning all commercial state‑owned enterprises into limited liability companies.
Quietly but significantly, Parliament repealed the statutes under which most large commercial state‑owned corporations were created. The practical consequence is that laws such as the Kenya Airports Authority Act, the Kenya Ports Authority Act, the KenGen Act and the Ketraco Act are no longer part of our statute books.
Put simply, corporatisation is the deliberate conversion of state‑owned enterprises from statutory bodies created by specific Acts of Parliament into companies incorporated strictly under the Companies Act. The government remains the owner, but only through shares—not through statute.
Under this model, the government exercises influence through boards, not through ministers. Yet true corporatisation will not occur in practice until we repeal the State Corporations Act and dismantle entities such as the State Corporations Advisory Committee.
Strictly speaking, many of our parastatals are already limited liability companies. In practice, however, they remain creatures of statute. That is why Cabinet Secretaries continue to wield power over budgets, borrowing, board composition and strategic direction.
National budget
As Parliament crafts legislation for the National Infrastructure Fund, it must ensure strict adherence to international best practice for sovereign investment funds. This Fund is not being created to substitute the national budget, but to enable co‑investment and capital recycling for economically productive infrastructure. Its purpose is to crowd in private capital.
Monday’s Cabinet dispatch stated that all privatisation proceeds will be ring‑fenced. I agree. But this must be entrenched in legislation, with automatic rules for the direct transfer of privatisation proceeds into the Fund. The law must also explicitly prohibit the Fund from being securitised to access loans from the ubiquitous loan sharks that are today feeding off every public fund in sight.
We will need clear fiscal rules to prevent ministers from raiding the Fund to plug short‑term budget gaps. Norway’s fiscal rule remains the global gold standard in this regard.
For the fund to outlive generations, we should invest most of the money in revenue-generating projects. Maybe we should have tolled Thika Road. We would have raised funds to build an upper deck. The Nairobi by passes also have potential.
Finally, if we truly want to move the needle, we must bring in professional fund managers, offer market‑linked remuneration, and enforce strict disclosure standards—including quarterly public reporting.
Mr Kisero is former NMG Managing Editor for Business and Economy. [email protected]
