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Kenya’s National Infrastructure Fund (NIF) has started deploying part of its KSh340 billion capital into government bonds as it prepares to finance major infrastructure projects.
NIF Chief Executive James Mworia said the bond investments are expected to generate about KSh42 billion annually while preserving the fund’s principal for future projects.
The investments were started in July, although the amount already committed to government securities has not been disclosed.
The strategy is expected to provide the fund with an income stream before larger amounts are committed to commercially viable infrastructure developments.
Banks Expected to Release More Cash
The bond purchases are also expected to affect the wider financial market by increasing liquidity available to commercial banks.
Mworia said the move could encourage banks to redirect more money towards businesses and households instead of concentrating funds in government securities.
Commercial banks have traditionally been major buyers of domestic government debt, partly because government securities are viewed as less risky than private-sector lending.
The NIF’s entry into the market is therefore being positioned as a way of releasing additional lending capacity into the private sector.
Fund Targets Major Infrastructure Projects
The KSh340 billion is intended to become the foundation for a much larger infrastructure financing programme.
The fund is targeting investments across sectors including energy, transport and logistics, ICT, water and agriculture, with projects expected to demonstrate commercial viability.
Among the projects being considered is a potential government investment in the Dangote-led refinery project in Lamu.
Interest has also reportedly been received from Kenyan and international investors seeking opportunities to co-invest alongside the NIF.
KSh3.6 Trillion Target
Mworia expects the entire KSh340 billion seed capital to be deployed by the end of the financial year in June 2027.
The fund is ultimately targeting about KSh3.6 trillion over the next decade through a combination of its capital, borrowing and partnerships with other investors.
The NIF was established as an alternative mechanism for financing infrastructure while reducing reliance on additional government borrowing.
Its initial capital was raised through state asset transactions involving Kenya Pipeline Company and Safaricom.
The bond strategy therefore represents an early stage of the fund’s broader plan rather than its final investment destination.
If the projected returns and co-investment model perform as expected, the fund could provide Kenya with a larger pool of capital for infrastructure without depending entirely on the national budget.
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