State to Establish National Infrastructure Fund

The Kenyan government is preparing to table a Bill in Parliament to establish the National Infrastructure Fund (NIF), an initiative by President William Ruto aimed at mobilising KSh 4 trillion for major development projects across the country. This move signals a strategic pivot to finance large-scale infrastructure projects domestically, reducing the nation's dependence on external borrowing.

President Ruto, speaking on Monday, October 13, 2025, during the commissioning of Phase One Horizontal Infrastructure at Konza Technopolis in Makueni County, emphasised that the fund will pool resources from the national budget, private sector investments, and proceeds from privatisation. This innovative financial mechanism is expected to generate reliable energy, guarantee food security through irrigation, and expand the national road network to enhance connectivity.

Historical Context and Vision 2030

Kenya's infrastructure development has been a cornerstone of its economic growth strategy, particularly under the Vision 2030 blueprint, which aims to transform the nation into a competitive, industrialising middle-income economy. Over the past two decades, significant progress has been made, including improved road networks like the Thika Superhighway and Nairobi's bypasses, upgrades at Jomo Kenyatta International Airport (JKIA), and the transformative Standard Gauge Railway (SGR). However, challenges such as poor investment decisions, budget deficits, political interference, and forex fluctuations have hindered the timely achievement of some infrastructure targets.

The country has historically faced a significant infrastructure financing deficit, requiring sustained expenditures of almost $4 billion (approximately KSh 580 billion) per year to meet its needs, according to the World Bank. The government has increasingly favoured Public-Private Partnership (PPP) models to address budgetary constraints and attract private investment.

Key Pillars of the Overhaul Plan

The KSh 4 trillion plan focuses on three critical areas: energy, water (irrigation), and transport infrastructure. President Ruto highlighted the need to expand power generation capacity by an additional 10,000 megawatts from the current 2,300 megawatts within the next five to seven years, at an estimated cost of KSh 1 trillion. This expansion is crucial to support growing industrialisation and manufacturing ambitions.

For food security, KSh 1.5 trillion will be allocated to build 50 mega-dams across the country, aiming to bring over two million acres of land under irrigation. This initiative seeks to reduce Kenya's annual food import bill, which currently stands at approximately KSh 500 billion.

In transport, another KSh 1.5 trillion is earmarked for building 1,000 kilometres of dual carriageways, 10,000 kilometres of tarmac roads, extending the Standard Gauge Railway to neighbouring countries, and modernising the Jomo Kenyatta International Airport.

Funding Mechanisms and Stakeholder Concerns

The National Infrastructure Fund will be capitalised through a blend of public and private financing. A recently enacted privatisation law will enable partial sales of state-owned enterprises, such as the Kenya Pipeline Company, potentially raising up to KSh 130 billion (approximately $1 billion) to capitalise the new funds. The government also plans to mobilise KSh 70 billion for infrastructure development in the upcoming financial year (FY2025/26) through 32 new PPP projects.

Analysts have urged clarity on the timelines, costs, and safeguards associated with this ambitious plan. The shift towards domestic financing and PPPs is seen as a way to rebuild fiscal discipline amid mounting debt-servicing costs. Kenya's total public debt stood at KSh 11.5 trillion as of May 2025, representing 67.4% of GDP as of December 2024, exceeding the IMF's recommended threshold of 50% for developing countries. The debt service to revenue ratio was 67.1% as of May 2025, indicating a significant portion of revenue is used for debt repayment.

Unanswered Questions and Next Steps

While the government has outlined the broad strokes of the KSh 4 trillion plan, specific timelines for the operationalisation of the National Infrastructure Fund and detailed project implementation schedules remain largely unannounced. The success of this initiative will depend on robust governance frameworks, credible fund management, and transparent procurement processes to avoid past pitfalls.

Evidence/Data Box

• Total Infrastructure Plan: KSh 4 trillion
• Energy Sector Investment: KSh 1 trillion to increase generation capacity by 10,000 MW (from 2,300 MW) within 5-7 years.
• Water/Irrigation Investment: KSh 1.5 trillion for 50 mega-dams to irrigate 2 million acres.
• Transport Sector Investment: KSh 1.5 trillion for 1,000 km dual carriageways, 10,000 km tarmac roads, SGR extension, and airport modernisation.
• Public Debt (May 2025): KSh 11.5 trillion (Central Bank of Kenya, May 2025).
• Debt-to-GDP Ratio (December 2024): 67.4% (Central Bank of Kenya, May 2025).
• Projected FY2025/26 Budget: KSh 4.2919 trillion (KPMG East Africa, June 2025).

What to Watch

The tabling of the National Infrastructure Fund Bill in Parliament will be a key event, as will be the subsequent legislative debates and approvals. Stakeholders will closely monitor the transparency and accountability mechanisms put in place for the fund's management and project execution. The government's ability to attract significant private sector investment and successfully implement the planned privatisation of state assets will also be crucial indicators of the plan's viability.