Kenya’s new infrastructure fund starts by buying government bonds

Kenya’s National Infrastructure Fund has started spending its 340 billion shillings (about $2.62 billion) in seed capital by buying government bonds. Chief executive James Mworia told Reuters on 7 October that purchases began in July and that he expects the full amount to be invested by June 2027. He did not say how much has gone out so far.

Why bonds first?

President William Ruto announced the fund in October 2025 as a way to pay for roads, power and other projects without piling more pressure on the budget.

Mworia’s argument is about knock-on effects. Commercial banks hold a large share of Kenya’s more than $50 billion in domestic government debt, and they often prefer it to lending to riskier private businesses. If the fund buys bonds, the thinking goes, banks have more room to lend to the rest of the economy.

A country squeezed by debt

The pressure is real. Debt repayments swallow 40% of government revenue each year, Reuters reported. Mworia described a country with heavy debt costs, big social needs, limited room to raise taxes and a large infrastructure gap.

The seed money is roughly a third of the government’s domestic borrowing target for the financial year ending June 2027, so how the fund moves matters for the local bond market. Whether the promised boost to private lending actually shows up is the next thing to watch.

Related reporting: Kenya lines up World Bank and AfDB money, but isn’t counting on the IMF.