Kenya can build more without heavy borrowing

For much of the past decade, Kenya’s economic conversation has revolved around debt. The public returns to familiar questions: How much do we owe? Why was it borrowed? Where was it spent? Is the debt sustainable?

These are important questions, but they risk obscuring a more fundamental issue: Kenya’s challenge is not simply the size of its public debt, but the financing model underpinning its development strategy. What Kenya faces today is less a debt crisis than an infrastructure financing dilemma.

Kenya’s infrastructure ambitions remain justified. Sustained economic transformation requires major investments in transport, energy, logistics, water, digital connectivity and urban infrastructure. Its aspiration to become East Africa’s logistics hub, manufacturing centre, aviation gateway and digital economy leader will require investments measured in trillions of shillings. But the traditional model — government borrows, builds, owns and borrows again — is approaching its limits. As debt-service obligations rise, fiscal space for development spending, education, healthcare and social protection shrinks.

The solution is not to stop building infrastructure, but to shift from a debt-financed to an investment-financed model. Infrastructure funds and asset-recycling programmes can mobilise private capital. The principle is simple: government capital should be catalytic, not dominant. Public resources should attract pools of investment rather than serve as the source of project financing.

Investable asset class

For Kenya, the National Infrastructure Fund (NIF) presents such an opportunity. Operationalised, it could turn infrastructure from a budgetary expenditure into an investable asset class. Kenya has valuable assets, including airports, logistics facilities, transmission networks, transport corridors and state enterprises. Through well-structured concessions, infrastructure trusts and investment vehicles, mature assets could attract pension funds, insurers, sovereign wealth funds and investors. Capital unlocked could then be recycled into new infrastructure without adding pressure to the balance sheet.

Equally important is Kenya’s underutilised domestic capital base. Pension assets, insurance funds, collective investment schemes, SACCO savings and diaspora resources represent substantial pools seeking stable investment opportunities. Yet infrastructure remains largely inaccessible as an investment class. A professionally managed NIF could bridge this gap by developing bankable projects, improving preparation, mitigating risks and creating investment products capable of mobilising institutional capital. Financing would shift from annual Treasury allocations towards a partnership between public and private capital.

The question is whether Kenya can afford not to change how infrastructure is financed. Countries relying primarily on sovereign borrowing eventually face declining fiscal flexibility and rising financing costs.