Experts have flagged gaps in the proposed law that seeks to create a National Infrastructure Fund (NIF), warning that they expose the endowment to risks of political patronage and financial leaks.
The State in January published the National Infrastructure Fund Bill 2026, which targets to create an NIF to mobilise Sh5 trillion by crowding-in private capital by leveraging up to Sh10 for every shilling invested.
Expert groups, including the Auditor-General Nancy Gathungu, the Institute of Certified Public Accountants of Kenya (ICPAK), and the Kenya Association of Manufacturers (KAM), however, criticised the Bill, warning that it lacked provisions for independent governance of the fund.
ICPAK warned that Clause 5 of the Bill, which touches on the establishment of the NIF, fails to ring-fence investment from political interference.
“Add new sub-clause: (3) The Fund shall be operationally independent and shall not be subject to direction on specific investments by any person or authority, except as provided under this Act. By insulating the Fund from directives on specific investments, the provision minimises the likelihood of politically motivated decisions that could compromise financial performance,” said ICPAK in a submission on the Bill.
The accountants’ lobby also criticised Clause 6 of the Bill, which provides for the governance and Board of Directors of the fund, saying that the composition of the board lacks important skills, particularly persons with expertise in sustainability and independent professional financial oversight.
“This may expose the fund to risks related to financial reporting…. Amend by adding the following: (f) one person with expertise in climate finance or ESG risk management. (g) One person nominated by the accountancy professional body,” said ICPAK.
“Add new sub-clause: (4) The board shall reflect a skills matrix including expertise in projects. A well-rounded board is better equipped to monitor management performance, assess risks, ensure compliance with legal and regulatory requirements, and uphold fiduciary responsibility,” it added.
Auditor-General Nancy Gathungu also flagged gaps in the proposed composition of the NIF board, warning that it lacked provisions for independence and expertise.
“There may be a need to have some non-independent directors, with knowledge of matters on national infrastructure development, in addition to the Principal Secretary to the National Treasury,” she said in submissions on the NIF Bill.
“However, with the exception of the PS, the National Treasury, there is no requirement for the other Directors to have expertise in infrastructure development, including finance, economics, investment banking, and other related areas of expertise,” said the Auditor-General.
Ms Gathungu also criticised Clauses 15 and 16 on the proposed administration of the NIF, warning that they created parallel executive roles which risk affecting accountability.
“Clause 15 and Clause 16 create two parallel executive lines; a Chief Executive Officer appointed by the board (Clause 15) and an administrator of the fund, designated by the Cabinet Secretary under Section 24(5) of the PFM (Public Finance Management) Act, 2012,” said the Auditor-General.
“This is not aligned to the provisions of Section 24(4) of the PFM Act 2012, which gives authority to the Cabinet Secretary to establish a national government public fund with the approval of the National Assembly. The National Infrastructure Fund, as proposed to be established under Clause 5 of the Bill, does not refer to Section 24(4) of the PFM Act 2012.”
The manufacturers’ lobby also disapproved of the proposed governance structure of the NIF and proposed the establishment of a two-tier governance structure by introducing a ‘board of trustees’.
“This is based on the following justifications: The Trustees shall serve as the legal custodians of the Fund’s assets and cash, providing oversight and ring-fencing the money from diversion,” said the KAM in its submissions.
“The board of directors shall remain responsible for technical investment decisions but must seek ‘custodial clearance’ from the trustees for all major disbursements. This separation improves governance by preventing concentration of authority in a single body and reducing the risk of conflicts of interest, operational interference, or weak oversight,” the lobby added.
President William Ruto has said that the money from the NIF will be invested in projects that will help grow the human capital, generate additional energy, and transform transport and logistics.
The government has indicated that proceeds from the ongoing initial public offering of Kenya Pipeline Company and partial sale of its stake in Safaricom will form part of the Fund’s seed capital.
The State expects to raise Sh106 billion from the Kenya Pipeline IPO and around Sh244.5 billion from selling a 15 percent stake in the telco to the South African firm Vodacom Group. The Sh244.5 billion includes an upfront dividend of Sh40.2 billion on what will be the government’s residual stake of Sh20 percent in Safaricom.
