World Bank. Photo | Courtessy.
The World Bank has cautioned that Kenya’s newly established National Infrastructure Fund will only provide temporary fiscal relief unless it is backed by broader reforms to strengthen public finances and improve government spending.
In its latest Kenya Economic Outlook, the lender says the fund could help ease pressure on the country’s budget in the short term by attracting private investment for infrastructure projects. It warns, however, that the initiative will not address deeper structural challenges such as weak revenue mobilisation, high public spending and rising debt.
The government expects the fund to mobilise up to Sh5 trillion by leveraging private capital, with every Sh1 invested by the state expected to attract up to Sh10 from private investors. The strategy is designed to finance infrastructure projects outside the national budget and create more fiscal space for sectors such as healthcare and social services.
The World Bank describes the fund as a positive step towards attracting private investment. It says proceeds from privatisation and asset sales channelled through the vehicle should complement, rather than replace, wider fiscal reforms.
The lender projects Kenya’s fiscal deficit will average 5.6 percent of Gross Domestic Product between 2026 and 2028 despite the establishment of the fund, underscoring the need for continued fiscal consolidation.
Government spending is also expected to increase during the current financial year. Budget expenditure is projected to rise to Sh4.8 trillion from Sh4.6 trillion, with the fiscal deficit narrowing only slightly to Sh1.11 trillion from Sh1.19 trillion.
To capitalise the infrastructure fund, the government has already undertaken several transactions. These include the sale of a 65 percent stake in Kenya Pipeline Company through an initial public offering that raised Sh106.3 billion and the disposal of its remaining 15 percent shareholding in Safaricom to South Africa’s Vodacom Group for Sh244.5 billion.
National Treasury Cabinet Secretary John Mbadi has also appointed Centum Chief Executive James Mworia and five other members to the fund’s board as the government moves to operationalise the institution.
The World Bank recently approved Sh97 billion in development policy financing for Kenya but has lowered its economic growth forecast for 2026 to 4.3 percent from an earlier projection of 4.4 percent.
The lender says long-term investor confidence will depend on strong governance, transparent management of the fund and clear accountability over its financial obligations. It notes that the success of the fund will ultimately be measured not by the amount of capital it mobilises but by the quality of projects it finances and the transparency with which it manages public resources.
