By Kenya’s National Infrastructure Fund (NIF) plans to set up a publicly traded investment vehicle to pool capital from private investors for co-financing infrastructure projects, Chief Executive Officer James Mworia said, according to a statement cited by Bloomberg.
Mworia outlined the plan during a conference in Nairobi, saying the fund is exploring several structures to draw in outside capital without exposing investors directly to project-level risk.
“One of the solutions I have in mind is to create an NIF infrastructure development fund that is listed on the Nairobi Securities Exchange,” Mworia told the conference.
A listed vehicle, he said, would give investors a way to gain exposure to Kenyan infrastructure assets while addressing concerns about mismatches between long-term project liabilities and investor demand for liquidity. Listing on the Nairobi bourse would also provide investors with a clear exit route, according to Mworia.
The National Infrastructure Fund is a state-backed vehicle created to finance roads, energy and other public infrastructure projects in Kenya, partly by attracting private and institutional capital alongside government funding. Mworia was named the fund’s first CEO on Sept. 7.
Mworia said the fund is wary of structuring investments in a way that would effectively hand private investors direct ownership stakes in individual infrastructure projects.
“If investors come directly into the projects, one might say we are privatizing these projects through the back door,” he said, according to the same conference remarks.
To avoid that outcome, the NIF is considering routing capital through pooled or intermediary structures rather than direct project stakes.
Among the options under review is a broader use of special purpose vehicles tailored to individual projects, which would allow the fund to isolate risk and tailor terms for each investment without transferring outright ownership to outside investors.
The fund is also looking at changes to the rules governing real estate investment trusts, or REITs, in Kenya, to make the structure more suitable for infrastructure financing.
REITs are typically used to hold income-generating real estate, but modifying the regulatory framework could allow similar structures to be applied to roads, energy plants or other infrastructure assets, broadening the pool of instruments available to the fund.
Kenyan regulators have in recent years sought to widen the range of listed investment products on the Nairobi Securities Exchange as the government looks to reduce reliance on direct borrowing to fund large infrastructure projects.
The National Infrastructure Fund has set a minimum target rate of return of 7% for the projects it backs, a figure set at 100 basis points above Kenya’s long-term inflation rate of 6%, Mworia said. The return threshold is intended to make projects attractive to private investors while reflecting the country’s macroeconomic conditions.
Mworia also said that once the fund becomes fully operational, it could issue infrastructure bonds as a further tool to raise capital from the market. Infrastructure bonds have previously been used by the Kenyan government to fund large-scale projects and have drawn strong demand from local investors due to tax exemptions on interest income.
The National Infrastructure Fund was set up as part of Kenya’s broader strategy to mobilize private capital for infrastructure development amid constrained public finances. According to a government statement on April 23, Kenya said it had mobilized $3 billion for the fund, underscoring the scale of ambition behind the initiative.
Mworia’s appointment as the fund’s first chief executive was announced Sept. 7, positioning him to lead the rollout of the co-investment structures he described at the Nairobi conference.
The proposals outlined by Mworia remain at an early stage, and no timeline has been given for when a listed infrastructure development fund, revised REIT rules or infrastructure bonds might be introduced. Kenyan authorities have not yet detailed the regulatory approvals that would be required to bring such a vehicle to market.
Kenya’s infrastructure financing needs remain substantial, with the government seeking alternatives to sovereign debt to fund transport, energy and housing projects.
A publicly listed co-investment vehicle, if implemented, would mark one of the more significant efforts yet to channel private and institutional capital into the country’s infrastructure pipeline through the Nairobi Securities Exchange.
