The government is set to commence implementation of key projects across the country beginning with the Jomo Kenyatta International Airport (JKIA) after enactment of the Ksh 5 trillion National Infrastructure Fund.
Speaking when he assented to the National Infrastructure Bill at State House Nairobi, President William Ruto said the fund which has been established with the Ksh 106 billion seed capital raised through the Kenya Pipeline Company Initial Public Offer will be utilized in expansion of the country’s aviation hub, JKIA.
“Today, I am pleased to announce that the expansion of Jomo Kenyatta International Airport will be the first major project financed through this new model. It will be structured with approximately Ksh 20 billion in equity participation from the National Infrastructure Fund and domestic institutional investors,” said President Ruto.
This comes barely a week after the government opened the tender for the expansion of the aerodrome into an airport city and a Special Economic Zone (SEZ) with bidders required to have a capital base of Ksh 100 billion.
The administration targets to leverage the seed capital twelve times in order to raise at least Ksh 1.2 trillion for infrastructure investment which President Ruto said will mobilize Ksh 5 trillion to meet the country’s infrastructure development needs.
The government expects additional resources to be mobilized through pension funds which currently have an asset base of Ksh 2.8 trillion as well as private sector led by local commercial banks.
President Ruto said the fund will be key in reducing Kenya’s debt exposure as a result of developing capital projects such as railway, ports, roads and energy which have often been financed through external borrowing to meet the financing gap estimated at Ksh 516 billion annually according to the World Bank estimates.
“When infrastructure is financed in foreign currency while the revenues are earned in Kenyan shillings, exchange rate volatility introduces significant risk. This challenge has long affected many of our utilities, particularly in the electricity sector,” he added.
According to National Treasury Cabinet Secretary John Mbadi, raising resources from privatization of mature state owned enterprises will ensure the country utilizes its assets better.
“There is need to wake up to the reality that mature assets can be put to better use. That we can prioritize these enterprises raise resources and invest in asset producing commercially viable public assets which would give us more economic value going forward than what we a realizing today,” he noted.
Africa Finance Corporation Chief Executive Officer Samaila Zubairu lauded the fund as a means for African countries to meet their infrastructure investment needs currently estimated at between $130-170 billion annually.
“Africa will rise when African capital builds African infrastructure that powers African industry. The Kenya infrastructure fund embodies this philosophy. It mobilizes domestic capital, it channels that capital into strategic infrastructure and it creates the conditions for industry and value creation to happen here in Kenya,” said Zubairu.
NIF Act provides for a Governing Council which will be the highest decision making organ comprising of the Cabinet Secretary for the National Treasury who is also the chairperson, the Governor of the Central Bank of Kenya (CBK) and the Attorney-General.
The President will also appoint six other non-public officers with proven expertise in finance to join the council for a three-year term.
The Council is expected to issue Investment Policy direction and recruit the Board of Directors while the CEO will be in charge of administering the fund.
