President William Ruto, (centre) Deputy President Prof Kithure Kindiki (left), Health CS Aden Duale (right) and other Cabinet secretaries after a Cabinet meeting at State House, Nairobi, on December 15, 2025.
A day after the Cabinet approved establishment of two kitties for President William Ruto’s Sh5 trillion plan to fund infrastructure projects, questions have emerged on the formation, utilisation and management of the funds.
The Cabinet on Monday approved the setting up of the National Infrastructure Fund (NIF) and the Sovereign Wealth Fund (SWF) that are expected to anchor the country’s long-term development by funding projects in health, agriculture, transport and energy sectors.
“Approved as a limited liability company, the National Infrastructure Fund will serve as the central engine for aligning the administration’s financial resources with national development priorities,” the Cabinet stated on Monday.
“The NIF will be overseen by a competitively appointed board and CEO, while the SWF will operate under a robust policy framework to ensure prudent investment, fiscal discipline and inter-generational equity.”
Pressed in a tight corner where he has limited room to borrow, Kenyans have rejected more taxes, and the private sector is hesitant to put its money into public projects, President Ruto has resorted to using public money to attract private-sector investments in public projects — hoping to make Kenya a First World country in 30 years.
Sale of parastatals
But the establishment of the funds without parliamentary approval has sparked accountability questions from economists, financial analysts, and governance experts after it emerged that billions of shillings from sale of parastatals and other government equities will be channelled through the kitties.
In October, the president had announced that he would seek the House backing of the ambitious plan.
“We have a plan as a government, and we will soon go to Parliament to establish the National Infrastructure Fund to ensure we complete and build enough roads across the country,” Dr Ruto said on October 31 during a development tour in Butere, Kakamega County.
Economists are questioning the level of independence the fund will have due to risks of possible interference by the State, and how public funds in the entity will be oversighted.
“A fund of this magnitude ought to be anchored in the law and operate as a constitutionally mandated entity,” says University of Nairobi (UoN) Economics Professor Samuel Nyandemo.
“It’s important that the Auditor-General gets explicit oversight on the funds by ensuring that proceeds from the sale of assets pass through the Consolidated Fund”.
Prof Nyandemo warns that the lack of oversight on billions of public money sitting at the entity could create loopholes for looting, abuse and wastage.
“You can’t sell a public asset then put the proceeds in a private company,” he says.
Speaking before the Cabinet sent out a dispatch addressing the structuring the fund as a limited liability company, National Treasury Cabinet Secretary John Mbadi said the NIF does not necessarily have to be created through an Act of Parliament.
Budgetary process
The CS was speaking in an interview early this month on “modalities of setting up the fund without the bill” even as he insisted that it “can be [created] through a budgetary process.”
“What we may need to do is to have the institution that will manage it,” said Mr Mbadi, noting that they intend to have the fund in place as early as next year.
Funds created by statute must publish accounts, submit to audits, and report to legislators. Their mandates, asset sources and risk limits are set in law, not boardrooms.
Treasury Cabinet Secretary John Mbadi speaks during treasury market update in Nairobi on December 4, 2025.
The government plans to fund the NIF through sale of public assets, through privatisation of state corporations, and sale of shares in some of the companies it owns.
It hopes that by having a fund from which it can inject some of the funding requirements in public projects, private sector players could pump in about 10 times more into projects, “reducing reliance on borrowing and taxation.”
“Every shilling invested through the fund is expected to crowd in up to Sh10 additional from long-term investors, including pension funds, sovereign partners, private equity funds and development finance institutions,” the Cabinet says.
But former Budget and Appropriations Committee chairperson Ndindi Nyoro described the planned Sh5 trillion as “borrowing outside the book” to circumvent Kenya’s ballooning public debt portfolio.
He pointed out that what the government wants to do is to borrow more outside the budget by selling State entities and using the proceeds to acquire a loan through leveraging.
Kiharu Member of Parliament Ndindi Nyoro.
He warned that mechanisms such as leveraging, securitisation, and crowding-in risk pushing the country into further debt without adequate public scrutiny.
“They are basically saying that for one shilling, they borrow 10 shillings. What they are doing is to run away from the ballooning public debt to create a fund for another debt,” said Mr Nyoro.
“I call it the national irregular debt fund. The government wants to overburden Kenyans with more debts outside the books of government debts,” he added.
Mr Mbadi says the government plans to use the fund to de-risk commercially viable public projects by making the initial investment of about 20 per cent, to incentivise private sector players into pumping their cash into the projects.
“NIF will be helping us in converting the assets in terms of privatised assets into commercially viable public infrastructure projects such as roads that would be dualled and tolled,” Mr Mbadi said.
Proceeds from the State’s investment into the Public Private Partnership Projects (PPPs) would then be used to fund other projects that may not be commercially viable, such as countryside roads, CS Mbadi says.
Among areas the government plans to fund using proceeds from the NIF is the construction of 1,250 dams, building of 30,500 kilometres of roads, extension of the Standard Gauge Railway to Malaba, modernisation of airports and the ports of Mombasa and Lamu, and injection of an additional 10,000 megawatts of new capacity to the national grid.
National Assembly Budget and Appropriations Committee member Makali Mulu said the legal and institutional framework of setting up the fund needed to be clear.
Kitui Central MP Makali Mulu
Mr Makali, who is the Kitui Central MP, argued that although the law allows for the creation of funds with approval of Parliament, it is not clear whether the NIF will also be captured in the main budget.
The lawmaker said other funds like the National Government Constituency Development Fund and National Government Affirmative Action Fund have their budgets factored in the main budget every year.
“Does this mean that this National Infrastructure Fund, which is Sh5 trillion, will also be captured in the main budget?” Asked Mr Mulu.
CS Mbadi reckons that most infrastructure funds across the world are private legal entities created under ordinary company or partnership law.
Heavyweights in this space such as Australia’s Macquarie Infrastructure, Brookfield Infrastructure Partners of Canada and Blackstone Infrastructure of the US are structured either as limited partnerships or limited liability companies.
This means they are regulated by financial authorities, not parliaments, and answer primarily to investors. Even when they invest in public assets, their accountability flows through contracts, not legislation.
Problems arise when governments route public wealth — such as proceeds from the sale of State land, companies, utilities or ports — through a vehicle established through an Executive order.
Without a clear legal anchor, Parliament has no direct role in approving the fund, defining which assets can be sold, or ring-fencing how the money is spent. Oversight can easily become opaque and vulnerable to abuse.
History shows that this is not simply a theoretical risk. Malaysia’s 1MDB, though State-linked, operated largely outside parliamentary budget controls, enabling massive looting.
In South Africa, complex off-balance-sheet entities tied to Transnet and Eskom reduced legislative scrutiny and facilitated State capture.
In several countries, asset-monetisation vehicles created by Executive action have later generated hidden liabilities that eventually landed on the public balance sheet.
By contrast, some countries have chosen to anchor infrastructure and investment funds in law, explicitly subjecting them to parliamentary oversight.
Africa50, backed by African governments and the African Development Bank, was created through an intergovernmental agreement. Nigeria’s Sovereign Investment Authority (NSIA), which includes a major infrastructure fund, was established by an Act of Parliament.
Indonesia’s Investment Authority (INA) was created through legislation that defines governance, reporting obligations and state guarantees.
Other examples of infrastructure funds cited by Mr Mbadi are India’s Infrastructure Finance Company Limited (IIFCL), which was established in 2006 to provide long-term financing for infrastructure projects and has since become one of the largest public infrastructure financiers in the developing world.
Public budget support
Argentina’s Fondo Fiduciario Federal para Infraestructura Regional (FFFIR), which was seeded with privatisation proceeds from Banco Hipotecario Nacional in 1997, has also lent the equivalent of $2 billion to provinces — nearly five times its initial capital — without relying on annual public budget support.
“These examples make a compelling case for Kenya to realign its economic strategy. After three years of fiscal consolidation, the economy has reached the limits of tightening, and further contraction would risk slowing growth and investment,” said Mr Mbadi.
But Mr Nyoro, who is also the Kiharu MP, called for transparency, public engagement, and accountability in all government borrowing, saying Kenyans deserve clear explanations before the country takes on more debt.
“Before we launch the Sh5 trillion fund, can the government come and face Kenyans and account for how the previously borrowed funds were utilised,” said the MP.
“Since 2022, the current regime has borrowed close to Sh4 trillion. This money is enough to fully fund free education from primary to university level, expand road networks, support water and irrigation projects, as well as deliver electricity and other essential infrastructure across all constituencies.”
For his part, Mr Mulu asked how the Controller of Budget and the Auditor-General will come in to provide checks and balances in the use of the fund.
“When you lock out the Controller of Budget, who looks at adherence to the law in expenditure of public funds, then no one will check such things,” said the MP.
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Additional reporting by Collins Omulo.
