THE CASE FOR A FUND DEDICATED TO INFRASTRUCTURE PROJECTS

Africa does not lack infrastructure opportunities. What it often lacks is patient, well-structured capital capable of carrying projects from development through construction and into operation.

At Africa Capital Week 2026, Dr. James Mworia, the newly appointed founding CEO of Kenya’s National Infrastructure Fund (NIF), made a compelling case for changing how Kenya finances major infrastructure. His central message was simple: Kenya has significant domestic capital, but it needs the right structures to bring that capital into infrastructure projects.

The NIF was established to accelerate the development of national infrastructure, mobilise private and non-traditional capital, and reduce reliance on public debt for commercially viable projects. Kenya’s National Infrastructure Fund Act provides the legal foundation for this mandate.

Why a dedicated infrastructure fund matters

Infrastructure projects require large amounts of capital and take many years to develop, construct and generate stable returns. These characteristics do not always fit comfortably within annual government budgets or the shorter investment and liquidity cycles of commercial lenders and asset managers.

A dedicated infrastructure fund helps bridge that gap.

Rather than requiring the Government to finance every road, airport, power station or port directly from the national budget, the fund can provide foundational capital and use it to attract additional investment from banks, pension funds, institutional investors and the capital markets.

In this structure, public capital does not have to carry the entire project. It becomes the anchor that makes it possible to mobilise much larger amounts of private capital.

1. It can unlock significantly more capital

Dr. Mworia explained that the NIF could preserve its initial capital and invest part of the income generated from that capital into infrastructure projects.

He illustrated a scenario in which approximately KSh40 billion of annual investment income could be combined with about KSh100 billion mobilised from local capital markets. This would create an equity pool of approximately KSh140 billion.

If that equity represents only 30% to 40% of the financing required for the underlying projects, the fund could then mobilise a further KSh300 billion to KSh400 billion in project debt.

The principle is more important than the exact figures: a dedicated fund allows Kenya to use a limited amount of public capital to unlock a much larger pool of investment.

2. It can ensure that only commercially viable projects are selected

One of the most important points Dr. Mworia made was that the NIF should not finance projects purely because they are politically attractive.

Under the proposed investment framework, a project must demonstrate that it can support at least 60% non-recourse project debt. This means lenders must be satisfied that the project can repay its debt from its own future revenues, without relying on a guarantee from the NIF or the Government.

This introduces a degree of commercial discipline.

If banks and other lenders are unwilling to finance a project based on its projected cash flows, that may indicate that the project is not commercially viable. Such a project may still be socially necessary, but it should be transparently funded through the national budget rather than presented as a commercial investment.

The NIF’s published Investment Policy Statement also establishes return, diversification and project-exposure requirements intended to guide investment decisions. The National Infrastructure Fund Investment Policy 2026.

3. It can give pension funds a more suitable route into infrastructure

Pension funds are natural investors in infrastructure because they hold long-term savings and have long-term obligations. However, investing directly in a single infrastructure project creates several difficulties.

Infrastructure investments are often illiquid. A pension fund may have to remain invested for many years before it can recover its capital. This can create an asset-liability mismatch where the fund’s money is locked into a project while it must continue meeting obligations to its members.

Dr. Mworia proposed the creation of a separate infrastructure development fund, potentially listed on the Nairobi Securities Exchange, which could co-invest alongside the NIF on the same terms.

A listed vehicle would allow pension funds and other investors to obtain exposure to infrastructure without necessarily holding an individual project investment until maturity.

Investors could buy and sell their interests, subject to market demand and the applicable regulatory framework.

This would not remove every liquidity risk, but it could make infrastructure a more accessible and flexible asset class for institutional investors.

4. It can strengthen transparency and public ownership

Kenya’s ports, airports, highways and power infrastructure are assets of national significance.

Direct investment by a small group of private investors can therefore attract concerns that strategic public assets are being privatised indirectly.

A professionally managed and regulated investment vehicle could provide a more transparent model.

Instead of investors negotiating separate interests in individual national assets, they could invest through a common vehicle with defined governance, reporting and investment rules. If that vehicle is eventually listed, ordinary Kenyan investors could also have an opportunity to participate in the value created by operational infrastructure assets.

Dr. Mworia described a cycle in which projects would initially be developed through special-purpose vehicles and, once operational and generating predictable revenues, could be listed on the Nairobi Securities Exchange. This would allow the NIF and its co-investors to recycle their capital into new projects while broadening Kenyan ownership of completed infrastructure.

5. It can reduce foreign-exchange risk

Many African infrastructure projects are financed in foreign currency even though their revenues are collected in local currency.

This creates a currency mismatch. When the local currency depreciates, the project requires more local-currency revenue to service the same dollar-denominated debt. The result may be higher tariffs, additional government support or financial distress within the project.

The power sector provides a clear example. Where an independent power producer is financed in dollars, its tariff will often contain a foreign-currency component to ensure that it can repay that debt.

Dr. Mworia argued that mobilising Kenyan-shilling financing from local banks, pension funds and capital markets would allow more infrastructure projects to be funded and refinanced in local currency. If both the debt and the project revenues are denominated in Kenyan shillings, the project becomes less exposed to exchange-rate volatility.

Local-currency infrastructure bonds could also refinance bank debt once a project has completed construction and reached stable operations.

6. It can retain more infrastructure value within Kenya

Foreign capital will continue to play an important role in African infrastructure. However, excessive dependence on foreign lenders means that a substantial portion of project revenues must leave the country as debt service.

Greater participation by Kenyan banks, pension funds and investors would allow more interest income and investment returns to remain within the domestic economy.

Local financing could also support the use of Kenyan-shilling-denominated engineering, procurement and construction contracts. This may encourage contractors to source more materials and services locally, strengthening domestic supply chains and creating a wider economic benefit beyond the infrastructure asset itself.

The real opportunity

Dr. Mworia’s remarks were ultimately a call for co-investment.

The NIF is not intended to replace banks, pension funds, developers or international investors. Its greater value lies in bringing these participants together within a credible structure, investing alongside them and allocating risk to the parties best able to manage it.

A dedicated infrastructure fund can create scale, introduce investment discipline, provide liquidity options and help Kenya finance more projects in its own currency. It can also create a pathway through which successfully developed infrastructure companies are eventually opened to wider Kenyan ownership.

However, the success of the model will depend on governance. Projects must be selected based on commercial and developmental merit, procurement must remain transparent, and the fund must be protected from political interference. Public capital must also be deployed on clear terms and without creating hidden contingent liabilities for taxpayers.

If these safeguards are maintained, the National Infrastructure Fund could do more than finance individual projects. It could help establish an entire domestic infrastructure investment market, one in which Kenyan savings finance Kenyan infrastructure and the returns from that infrastructure continue circulating within the Kenyan economy.