New infrastructure fund must prove its worth to the public

Kenya’s National Infrastructure Fund has an opportunity to change how the country finances roads, energy, water and other critical infrastructure. But converting public assets into billions of shillings is not, by itself, development and Kenyans must ultimately see better infrastructure, stronger businesses and tangible improvements in their livelihoods.

The fund has been capitalised with approximately Sh340 billion, drawn from proceeds associated with the partial sale of the government’s stake in Safaricom and the Kenya Pipeline Company divestiture.

It has begun deploying this capital into domestic government bonds as it seeks to preserve its resources and generate income for future infrastructure investments.

The leadership of the National Infrastructure Fund (NIF) has projected annual returns of about Sh42 billion from government securities, hoping that these returns could provide a useful financing stream.

However, it’s important to remember that projected income is not the same as money already earned, and income from financial investments is not the same as the economic benefits generated by completed infrastructure.

The real test in this regard will thus be whether the fund can turn public wealth into productive assets that deliver lasting national value and build a stronger economy for all citizens.

The reason why this distinction matters is because the fund’s capital originates, in part, from the disposal of public assets and therefore Kenyans have a right to be provided with clear evidence that the proceeds are being managed prudently and converted into investments that create benefits beyond those available from simply holding financial securities.

Moving forward, the government must not measure success by the amount of capital mobilised, interest earned, or projects announced, but by what is actually delivered. This is because a project can easily attract billions in financing yet still fail if construction costs escalate, demand is overestimated, or if the resulting infrastructure sits underused.

To overcome these pitfalls, the NIF must therefore adopt a broader and more transparent definition of performance proposed below.

Firstly, every proposed investment should undergo rigorous and independent appraisal. This should assess construction costs, realistic demand, operating expenses, maintenance requirements, financing risks and expected cash flows to ensure that commercial viability is clearly demonstrated rather than assumed. Not least, where a project offers substantial social benefits but cannot generate sufficient revenue to cover its costs, the funding model and justification should be disclosed clearly.

Secondly, the fund should publish an annual public performance scorecard which should distinguish capital committed from capital actually disbursed and distinguish between private investment announced from funds genuinely secured. In addition, the public should be clearly informed about the projects under construction from those completed and operational assets. It should also compare actual costs, revenues and completion dates against original projections.

Thirdly, the fund must prove it can attract additional private investment rather than simply shifting financing between sources. This co-investment would signal to the market that projects have sound commercial foundations, credible governance, and clearly allocated risks.

Furthermore, public reporting must fully disclose any government guarantees or financial commitments supporting these investments, as these mechanisms expose taxpayers to direct liabilities if any projects underperform.

It is encouraging to see that Parliament has already scrutinised the fund’s investment-policy framework and identified areas requiring stronger safeguards, including project selection, risk management, investment limits and the assessment of whether intended users can afford the services proposed. This legislative oversight is an important starting point for ensuring that investments remain financially sustainable and ultimately deliver genuine value for money to the public.

Crucially, Kenyans must not wait a decade to discover if the fund has worked, and, therefore, performance metrics must be established from the outset, with progress regularly reported in clear and accessible language that the public can understand.

Finally, accountability should not end at project handover and the government must ensure that infrastructure constructed with public funds, whether a road, power plant, or water system, is judged by its actual operational performance and intended purpose, rather than mere physical completion.

Some critical metrics to consider in this regard might include whether these projects are reducing transport costs, improving electricity reliability, expanding access to water or enabling businesses to become more productive. One way to identify any gaps between promised and actual outcomes can be through conducting independent reviews of all completed projects.

Implementing the above safeguards can help to instil deep financial discipline and transparency, ultimately strengthening investor confidence and unlocking the long-term capital Kenya needs to build a resilient and thriving economy, without placing unnecessary pressure on public finances.

Ultimately, the fund’s legacy should also be judged by the productive infrastructure it delivers, the private investment it attracts, the economic opportunities it creates and the lasting public value it preserves and not how much money it controls.