National Infrastructure Fund Sets 7% Annual Return Threshold for Projects

The National Infrastructure Fund will only bankroll projects that can largely pay for themselves, requiring that at least 60% of a project's financing come from loans that lenders cannot chase the Fund for if the project collapses, according to a policy document submitted to parliament. 

• According to the National Infrastructure Fund Investment Policy, projects in the fund’s pipeline must also be profitable enough to pay the Fund back at least 7% a year on whatever stake it holds, similar to the annual dividend a shareholder would expect for taking on the risk of investing.
• These directives come months after the National Infrastructure Fund Act was passed and signed by President William Ruto, creating a corporate investment vehicle designed to mobilize private and non-traditional capital for commercially viable infrastructure projects 
• This fund will target KSh 5 trillion in mobilized capital over time, relying on a blend of asset monetization, pension-fund allocations, sovereign partners, private equity, and climate-finance pools to enable the country to build highways, railway lines, electricity and ICT infrastructure, seaports, and airports without relying on costly loans. 

According to the policy document, the Infrastructure Fund itself is barred from taking out loans against its own assets, so any borrowing happens only within the individual project, meaning if that project fails, the fund’s broader pool of money stays protected.

To further limit exposure, no single sector can absorb more than 40% of the Fund's assets, and no single project can take more than 20%. However, projects that fail to meet these commercial requirements will not automatically be rejected. The policy allows them to still qualify if the government provides additional support such as guarantees or subsidies permitted under the law. This will give room for projects that matter politically or socially, but are not commercially attractive on their own. 

Oversight of the fund has been split between a governing council, chaired by the National Treasury Cabinet Secretary, which will set investment policy, and a board, which carries it out through an annual business plan and a risk management framework. 

In July, CS Mbadi appointed James Mworia, Fahima Ali Ahmed Zein, Christopher Kibui Maranga, Latoya Ouna, Lawrence Kibet, and Mohammed Abdirahman Hassan to the National Infrastructure Fund Board for three-year terms. The policy itself is valid for five years and must be reviewed annually, with any changes recommended to the governing council.

When the fund was being deliberated, government officials floated the dualling of Thika Road, the expansion of the Athi River-Namanga corridor, and the modernization of Jomo Kenyatta International Airport (JKIA) as the kind of commercially viable works the fund could eventually finance. 

Much of that seed capital that the infrastructure fund will kickstart operations with will come from the government's own asset sales, tying its fortunes to the politically sensitive divestiture program that has already drawn intense scrutiny including the sale of part of the Treasury’s Safaricom stake to Vodacom and the listing of the Kenya Pipeline Company at the NSE.