• Kenya approved two national infrastructure funds targeting KSh5 trillion ($38.7 billion)
• The government seeks to mobilise private capital and reduce reliance on debt and taxation
• Transport, energy and stalled strategic projects rank among the priority sectors

The Kenyan government approved on Monday, December 15, 2025, the creation of a National Infrastructure Fund and a second sovereign fund, which together will mobilise 5 trillion shillings, or about $38.7 billion, to finance infrastructure development, including roads and power plants.

President William Ruto floated the initiative in recent months as part of efforts to unlock large-scale private capital while reducing reliance on borrowing and taxation to fund priority programmes.

The announcement comes as Kenya records one of Africa’s highest debt-to-revenue ratios, following a decade of heavy borrowing to finance infrastructure projects.

Budgetary pressure pushed the government to tighten fiscal measures, including tax increases. Public protests against new levies forced authorities to revise the 2024/2025 Finance Act and to launch an audit of public borrowing in September 2024.

Against this backdrop, the government now seeks alternative financing mechanisms to sustain infrastructure investment without worsening fiscal stress.

Under the new framework, the funds will draw resources from mineral and petroleum revenues, dividends from public investments, and a share of privatisation proceeds.

The transport sector illustrates the funding gap. Several long-announced infrastructure projects stalled due to financing constraints, including the extension of the Standard Gauge Railway (SGR) toward Uganda, the expansion of Nairobi’s Jomo Kenyatta International Airport (JKIA), and multiple road construction projects nationwide.

Despite financing challenges, the government launched Phase 1 of the Gilgil–Nakuru–Mau Summit highway dual carriageway in early December.

The motorway project faced years of delays following the withdrawal of initial financiers, highlighting the funding risks the new infrastructure funds aim to address.

Henoc Dossa