SUMMARY: In November 2025, Kenya's president announced a National Infrastructure Fund with targets like 50 mega dams and 10,000 MW of power. But what exactly is an “infrastructure fund”, and how realistic are these goals?
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In this article:
The Core Dilemma
How Does an Infrastructure Fund Work?
Where the Cash Comes From
Unrealistic Targets
Surviving Election Cycles
Challenges and Risks
What to Watch For Next
The Real Test
THE CORE DILEMMA
Kenya is facing a tricky financial problem that has been building up for years.
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The country urgently needs essential facilities such as roads, dams, power, etc., but these projects are very expensive.
Typically, Governments finance these projects in two ways:
borrowing money (loans from banks or foreign governments)
using annual budget money (taxes collected each year)
But annual budgets are unreliable, and Kenya doesn’t have much room left to borrow more in the traditional way.
We already spend a large share of our income paying back debt, yet many of the projects funded by that borrowing have not delivered the profits expected.
At the same time, several government-owned companies (parastatals) are struggling to stay afloat.
Instead of contributing money to the economy, they often drain it.
When a country that is struggling financially (like Kenya) needs expensive infrastructure to generate an income, yet they need income to pay for the infrastructure, what does it do?
This circular challenge sits at the heart of Kenya’s development dilemma.
To break that cycle, the President, in a State of the Nation Address, announced a new financing approach built around two separate but complementary vehicles:
the project-focused ‘National Infrastructure Fund (NIF)’ and,
the longer-term investment-oriented ‘Sovereign Wealth Fund (SWF).’
The NIF focuses on building specific projects, while the SWF is meant to grow national wealth over the long term by investing across sectors.
But, how exactly does an “infrastructure fund” work?
In a country that's already broke, where will this fund raise money from? And is it stable enough to survive different political cycles?
HOW DOES AN INFRASTRUCTURE FUND WORK?
An infrastructure fund is similar in principle, to a local chamaa that pools money to fund projects. But it’s much larger, more formal, professionally managed, and structured to attract institutional and private investment, often running into billions of shillings.
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Think about a typical Kenyan chamaa, where everyone contributes a little every month.
No single member can buy land alone, or build apartments alone.
But when they pool their money, big things become possible.
Now imagine Kenya trying to build a mega-dam, a new power plant, a major highway or an irrigation system covering thousands of acres.
These projects cost tens or hundreds of billions, we can’t “save up” for them through the normal budget.
We also can’t keep borrowing endlessly, the debt is already too high.
So what do you do when something is essential, but too expensive to pay for all at once?
You create a national chamaa.
That’s basically what an Infrastructure Fund is, except it can bring in huge sums from outside contributors and fund projects worth billions.
In simple terms, the National Infrastructure Fund (NIF) is a special pool of money created specifically to pay for long-term infrastructure projects. Think 10–30 year horizons, not yearly budget cycles.
It’s structured as a company, not just another government program. This means it has:
a CEO and board of directors
formal governance rules
professional management
The goal is for it to act more like an investment fund than a typical budget item.
But where does the money to contribute to this “chamaa” come from?
WHERE THE CASH COMES FROM
Unlike normal spending that depends on taxes each year, the NIF will be funded through a variety of sources.
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The three main channels are:
1. Proceeds from Privatisation
When the government sells part of a state-owned company (like shares in Safaricom or Kenya Pipeline Company), that cash doesn’t go into the regular budget, it goes straight into this fund.
2. Capital Markets & Investors
A huge benefit of this setup is the leverage effect.
The fund is designed to attract private and institutional investors such as pension funds, insurance companies, and development finance institutions.
The idea is that every shilling the fund invests will attract up to 10 shillings in private capital, meaning private investors help carry the load.
3. Domestic Savings & Public Investors
Ordinary Kenyans, pension savings and other domestic pools of capital may be able to participate, opening infrastructure investment beyond government alone.
UNREALISTIC TARGETS
At launch, the government linked the NIF to ambitious targets, raising questions about how realistic those goals are, and whether the fund can deliver at that scale.
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On paper, the fund is a sensible response to Kenya’s money problems, but the targets announced are ambitious.
Increase power generation by at least 10,000 MW over 5–7 years.
Build 50 mega dams, 200 medium dams, and 1,000 micro-dams across Kenya.
To put that in context, Kenya’s current installed power capacity is just over 2,000 MW.
Adding almost four times that amount within a few years would require massive investment, fast project execution, and major upgrades to the national grid.
While renewable energy like geothermal, solar, and wind makes rapid expansion more plausible, reaching the full target within the stated timelines would be difficult.
The same applies to large dams.
Mega dams are complex, expensive, and slow to deliver, often taking years of planning, approvals, and construction.
Some progress is realistic, but completing all the announced projects on schedule would require
exceptional coordination,
funding,
and continuity across political cycles.
The Infrastructure Fund strengthens the how of financing development, but the scale and speed implied by the targets remain an open question.
SURVIVING ELECTION CYCLES
A common question people ask about big initiatives like the NIF is, is it tied to one president’s term, or will it survive beyond the current administration?
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According to the Cabinet Dispatch and government documentation, the NIF is being set up as a legal entity (a limited liability company) with its own Board of Directors, CEO, and governance structure.
It’s not a personal project of any one leader.
It's designed to be a long-lasting institution that can outlive one political term, similar to public financial institutions in other countries.
This means it will have rules, procedures, transparency requirements, and professional oversight.
Like most national institutions:
Even after one president leaves office, the institution remains in place.
Future administrations can modify priorities or management (through laws or policy), but they cannot just wipe it away by decree.
The Board and CEO (once appointed) have fixed terms, which gives some stability and continuity
This structure is similar to how central banks or pension funds operate. They survive political cycles, ideally insulated from short-term politics.
CHALLENGES & RISKS
Although the fund sounds exciting, it’s not guaranteed to work perfectly.
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Rather than single points of failure, experts point to a set of conditions that must be met for a fund like this to work.
1. Governance and political insulation matter
If the fund isn’t truly protected from politics (with clear rules, an independent board, and continuity across administrations) everything else can fall apart.
2. Project selection and execution are critical
The fund only works if projects are well-chosen and delivered on time and on budget. Land, permits, contractors, and management all need to be lined up properly.
3. Financial sustainability can’t be overlooked
Projects need reliable revenue streams, and guarantees, tariffs, and risk-sharing must be structured carefully. Otherwise, the fund risks becoming another hidden debt.
4. Investor confidence drives success
If long-term investors (like pension funds, insurers, or DFIs) don’t trust the system, they won’t commit the capital needed to make these mega-projects happen.
WHAT TO WATCH FOR NEXT
As with many grand plans, what happens next with the NIF will reveal whether it stalls or becomes a serious development tool.
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Watch out for these five signals:
1. The Legal and Institutional Setup
The first thing to watch is the actual legal framework establishing the fund.
This includes:
The law or regulations that govern it
How independent it really is from day-to-day politics
Whether its mandate is clear and hard to change
Strong laws create discipline, weak ones leave room for interference.
2. Who Runs It
Institutions are only as strong as the people running them.
Pay close attention to:
Who is appointed to the Board of Directors
The background and credibility of the CEO and senior management
Whether appointments look professional or political
This will signal whether the fund is meant to behave like an investment vehicle, or a political tool.
3. The First Projects It Funds
The early projects matter more than later ones.
Watch:
Which projects are approved first
Whether they are economically sound or politically popular
If they have clear revenue models (tolls, power sales, water fees, etc.)
The first few deals will set the fund’s reputation with investors.
4. Whether Private Capital Actually Shows Up
The fund’s success depends on crowding in private money, not just recycling public assets.
Positive signs include:
Participation by pension funds, insurers, and DFIs
Long-term commitments, not short-term promises
Transparent reporting that builds investor trust
If private capital stays away, the model breaks down.
5. Transparency and Public Reporting
Finally, watch how openly the fund communicates.
You'll want to see:
Regular public reports on finances and performance
Clear disclosure of risks and returns
Independent audits
Transparency and good governance is key for building credibility over time.
THE REAL TEST
The National Infrastructure Fund is not a silver bullet. It doesn’t magically make money appear, and it doesn’t guarantee that every project will be built on time.
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What it does offer is a different way of thinking about development finance.
If the fund is:
governed well,
insulated from politics,
and disciplined in how it selects and delivers projects,
It could become a powerful tool for closing Kenya’s infrastructure gap.
If not, it risks becoming yet another complex structure that promises a lot but delivers little.