Can the National Infrastructure Fund borrow like government? Here’s how it works

The newly created National Infrastructure Fund (NIF) aims to unlock billions of shillings for major development projects in Kenya, but unlike the national government, the fund will not directly borrow money and pass debt obligations to taxpayers.

Instead, the proposed financing model positions the fund as an investment platform designed to attract capital from large institutional investors to finance commercially viable infrastructure.

Under the framework of the National Infrastructure Fund Act, the fund is restricted from borrowing in the traditional way the government does through sovereign debt.

Government borrowing typically involves taking loans that are ultimately backed by taxpayers. 

The NIF, however, is structured to mobilise private and institutional capital for infrastructure projects rather than accumulate public debt.

In practice, the fund will pool investments from entities such as pension funds, sovereign wealth funds, development finance institutions and climate finance partners. 

These investors provide capital in expectation of returns generated by the infrastructure projects themselves.

This model is intended to reduce pressure on public finances while still enabling large-scale infrastructure development.

According to the law, the structure creates an investment marketplace where long-term capital can be matched with projects capable of generating sustainable revenue.

A key requirement under the fund’s model is that projects must be bankable.

A bankable project is one that can generate predictable revenue over time, allowing investors to recover their capital and earn returns.

Examples of infrastructure typically considered bankable include airports, toll highways, energy projects and logistics infrastructure.

For instance, the expansion of Jomo Kenyatta International Airport qualifies as a bankable project because airports generate multiple revenue streams.

These include landing fees charged to airlines, passenger service charges, cargo handling fees and commercial activities such as retail concessions and parking.

The fund’s structure reflects a broader policy shift toward financing infrastructure through investment partnerships rather than sovereign borrowing.

By attracting long-term capital from institutional investors, policymakers hope to fund major national projects while limiting the growth of public debt.

If implemented successfully, the National Infrastructure Fund could become a central vehicle for financing Kenya’s next generation of large-scale infrastructure projects.