Kenya’s Cabinet has approved the establishment of the National Infrastructure Fund and a Sovereign Wealth Fund, marking a major policy shift aimed at anchoring the country’s long-term development and accelerating its transition into a high-income economy. The approvals form the backbone of a Sh5 trillion investment-led roadmap designed to modernise infrastructure, strengthen food security, expand energy generation and reduce reliance on public borrowing .
The decisions were made during a Cabinet meeting held at State House, Nairobi, and signal a move toward structured, professionally managed financing mechanisms that leverage public assets to attract large-scale private capital.
National Infrastructure Fund to Anchor Public Investment Strategy
The National Infrastructure Fund will be established as a limited liability company and will serve as the government’s central vehicle for aligning financial resources with national development priorities. The Fund will mobilise domestic savings, monetise mature public assets and channel privatisation proceeds directly into infrastructure projects that generate long-term economic value .
Under the approved framework, all proceeds from privatisation will be ring-fenced exclusively for infrastructure investment. Cabinet projections indicate that every shilling invested through the Fund is expected to crowd in up to Sh10 from long-term investors, including pension funds, sovereign partners, private equity funds and development finance institutions.
The approach is intended to reduce pressure on public borrowing and taxation while accelerating delivery of large-scale projects critical to productivity and economic competitiveness.
Sovereign Wealth Fund to Manage Strategic National Revenues
Cabinet also approved the Sovereign Wealth Fund Policy, establishing a national fund to manage revenues from mineral and petroleum resources, dividends from public investments and a portion of privatisation proceeds .
The Sovereign Wealth Fund will be anchored on three pillars:
inter-generational savings, protection against external economic shocks and strategic investments that deliver commercial returns. The policy operationalises Article 201 of the Constitution on inter-generational equity and aligns with the Kenya Kwanza administration’s investment-led growth agenda.
By separating strategic savings from routine budget expenditure, the fund is expected to strengthen fiscal discipline while supporting long-term national resilience.
Massive Irrigation and Food Security Investments Planned
Food security forms a core pillar of the new financing architecture. Cabinet approved plans to undertake large-scale modern irrigation, including the construction of 50 mega dams, 200 mini-dams and more than 1,000 micro-dams across the country .
These investments are expected to bring an additional 2.5 million acres under agricultural production, reinforcing food and water security, supporting agro-industrialisation and improving rural livelihoods.
The government aims to position Kenya as a net-exporting food economy, reducing vulnerability to climate shocks and import dependence.
Transport and Logistics Expansion to Drive Trade
To support trade and industrial growth, Cabinet approved major transport and logistics investments under the new funding framework. Planned projects include the dualling of 2,500 kilometres of highways, the tarmacking of 28,000 kilometres of roads, extension of the Standard Gauge Railway to Malaba, and expansion of regional oil pipelines .
Airports and ports, including Mombasa and Lamu, will also be modernised to strengthen regional connectivity between farms, factories, cities and export markets.
Cabinet further approved an innovative financing model for priority transport projects, including the Naivasha–Kisumu SGR Phase 2B, the SGR link to Uganda, the Nairobi Railway City Central Station, Bus Rapid Transit Lines 2 and 3, commuter rail systems and non-motorised transport infrastructure.
Sh123 Billion Paid to Settle Pending Road Bills
In a move expected to restore contractor confidence, Cabinet noted that all pending certified works and accrued interest in the Ministry of Roads up to 31 December 2024 have been fully settled. The ministry has paid Sh123 billion, unlocking or accelerating 875 road contracts since April 2025 .
The payments are expected to restart stalled projects nationwide and stabilise the construction sector.
Energy Expansion and Policy Reforms Approved
Cabinet approved the National Energy Policy, aimed at accelerating access to reliable, affordable and sustainable energy while addressing challenges such as low electricity access, unreliable supply, limited investment and climate risks .
The policy promotes renewable energy, private sector participation and climate-resilient development. In parallel, Cabinet endorsed the National Petroleum Policy, replacing the outdated 2004 framework to align with constitutional requirements and recent oil discoveries. The updated policy focuses on governance, investment attraction, energy security, LPG uptake, revenue management and environmental protection.
To support industrialisation and the digital economy, the government plans to add at least 10,000 megawatts of new energy generation capacity over the next seven years.
Security, Transport Digitisation and Social Policy Measures
Beyond infrastructure and energy, Cabinet approved the establishment of the National Integrated Security Command and Control System, replacing obsolete platforms with a technology-driven system enabling real-time intelligence sharing. Initial deployment will prioritise major urban centres and key transport corridors, including Nairobi, Mombasa, Kisumu, Nakuru and Eldoret .
Cabinet also approved the rollout of second-generation smart driving licences through a public-private partnership. The system will integrate instant fines, a mobile licence wallet and driver merit and demerit points to enhance road safety.
Additional approvals included the Livestock Value Chain Support Project, targeting improved dairy productivity and farmer incomes, and the National Care Policy, which seeks to address unpaid care work, strengthen service coordination and promote gender equality.
