When Kenya first enacted the Sovereign Wealth Fund Act in 2023, the ambition was clear: to create an institutional mechanism capable of transforming finite national revenues—whether from privatization, extractives, or fiscal surpluses—into sustainable, intergenerational investments.
That vision briefly stirred optimism. The country was poised to join the ranks of nations using wealth funds to smooth economic shocks and accumulate long-term reserves.
But the suspension of the 2023 Act by the High Court a year later reset that momentum. It revealed both legislative design flaws and governance uncertainties that the Treasury is now attempting to correct through the Sovereign Wealth Fund (Amendment) Bill, 2025.
The new Bill appears more deliberate, proposing constitutional alignment, stronger oversight, and a broadened investment mandate. Still, beyond its technical refinements, many structural questions persist—questions that go to the heart of Kenya’s fiscal credibility, institutional maturity, and political discipline.
As someone who has followed the fund’s evolution closely, I find ten of them particularly unresolved.
Has the Fund truly resumed operations?
The new Bill reopens the legislative pathway, but there is no official confirmation that the suspension of the earlier Act has been lifted or whether preparatory work within the National Treasury is ongoing.
The Fund’s legal and administrative continuity remains ambiguous. The distinction is not academic.
Without transitional provisions or a gazetted implementation plan, it remains unclear whether the legislation is rebuilding from scratch or retrofitting the earlier framework. A sovereign wealth fund must project clarity and continuity—both to Parliament and to markets. At present, it exists more as a legal concept than an operating institution.
From where will initial capitalization come?
This remains the most pressing structural dilemma. The 2025 Bill reiterates the original funding possibilities—budget surpluses, privatisation proceeds, natural resource royalties, dividends from state corporations, and other designated revenues.
Yet these sources remain largely theoretical. Kenya is not running fiscal surpluses; it is consolidating deficits under heightened debt service pressures. It has no persistent mineral windfall, and privatisation transactions are slow. In the absence of guaranteed non-recurrent income, the likelihood of meaningful capitalisation in the short term is minimal.
Unless Parliament specifies a ring-fenced mechanism—such as earmarking a share of privatisation inflows or specific natural resource royalties—the sovereign fund risks sitting empty.
A wealth fund financed through fresh borrowing, or casual transfers from the Consolidated Fund, would contradict its very rationale.
Are deposit and withdrawal rules sufficiently anchored?
The Bill authorises the Cabinet Secretary to prescribe regulations detailing how funds flow in and out, but the specific parameters are absent. That discretionary approach undermines predictability.
In the global context, successful sovereign funds hard-code their fiscal rules. Norway’s model limits withdrawals to a fixed percentage of fund value annually; Chile’s captures mineral revenues above defined price thresholds.
Kenya’s draft, however, remains largely procedural. It should not rely solely on administrative rule-making by Treasury. For credibility, the deposit and withdrawal formulae must be transparent, quantifiable, and preferably approved by Parliament—otherwise, the Fund may quietly become a fiscal contingency account.
Is governance truly independent this time?
The 2025 Bill improves the appointment process: Board members would be shortlisted by an independent selection panel, vetted by Parliament, and serve fixed, staggered terms.
These are positive adjustments. Even so, independence extends beyond appointment. It encompasses financing, reporting, and tenure protection.
If the Board’s budget must still pass through the National Treasury, or if removal clauses remain broad, practical autonomy remains weak.
Kenya has repeatedly seen notionally independent institutions eroded by budgetary control and administrative interference. The heart of institutional design is not formality—it is insulation.
True independence will require a transparent appointment record, operational funding outside the ordinary Treasury framework, and fixed reporting lines to Parliament rather than to the parent ministry.
What are the binding transparency obligations?
Here, the Bill shows partial progress but stops short of best practice. It mandates annual audits by the Auditor-General and annual reports to Parliament but does not require public disclosure of underlying investment policy, portfolio composition, or benchmark performance.
The Santiago Principles—global standards for sovereign wealth fund transparency—call for proactive publication of audited statements, governance structures, and investment strategies.
Kenya’s Bill references these principles but does not compel adherence. In an environment where public finance trust remains fragile, transparency is not optional; it is foundational to legitimacy. The more opaque the Fund’s activities, the quicker its public confidence will erode.
How does it fit alongside the National Infrastructure Fund?
An enduring design question is how this new Fund aligns—or competes—with the National Infrastructure Fund (NIF). Both are Treasury-linked investment vehicles with ambitions to mobilize capital for national development.
Their mandates appear to overlap substantially. The language of the 2025 Bill allows the SWF to make “strategic investments in priority sectors.” That phrasing easily overlaps with the NIF’s mandate.
Without clear boundaries, the risk is duplication or even competition for the same resources. Internationally, SWFs typically prioritise offshore or diversified assets to mitigate domestic macroeconomic distortions, while infrastructure funds concentrate on local capital formation.
Kenya must articulate this line clearly. If the distinction remains blurred, both vehicles may underperform—the SWF as a stabiliser and the NIF as a financier.
What concrete safeguards exist against political misuse?
The Bill adds an encouraging layer of accountability: misuse of Fund assets constitutes an offense, with penalties prescribed under the Public Finance Management framework.
Yet institutional safeguards are still thin. Substantial discretion remains with the Cabinet Secretary—particularly in approving withdrawals and defining investment categories by regulation. Kenya’s fiscal history teaches that discretion without enforcement breeds vulnerability.
February 2026 Kenya SWF The amended law should therefore specify mandatory audit cycles, empower independent inspectors (possibly under the Auditor-General’s office), and institutionalize a whistleblower mechanism within the Fund’s governance structure.
Without such checks, the SWF could easily drift toward the same fate as several mismanaged state investment vehicles before it.
Who manages the money—and how strong is Kenya’s capacity?
The Bill allows the Board to either hire or establish a professional Fund Manager. However, neither the qualifications for that manager nor the management framework is yet described.
Managing a sovereign portfolio requires specialist capacity—asset allocation skills, macroeconomic modelling, risk management, and global capital market experience.
Kenya’s public investment institutions have limited exposure to these environments. If Treasury constrains management appointments or outsources them under opaque contracts, the Fund’s technical integrity could suffer.
The best model would blend global expertise with local capacity building—perhaps through structured partnerships with fund managers from mature SWF jurisdictions. That conversation has not begun, and until it does, management competence remains a critical vulnerability.
How will conflict-of-interest rules be enforced?
The new Bill reaffirms compliance with the Leadership and Integrity Act and Kenya’s Code of Conduct for State Officers. Yet it still defers actual enforcement to subsidiary regulations—regulations that routinely take years to finalise.
Effective conflict management needs specificity: limitations on personal holdings in companies eligible for SWF investment, mandatory asset declarations for trustees and executives, and a clear recusal protocol for decision-makers.
International funds, from Singapore to Botswana, institutionalize these standards to prevent insider influence. Kenya cannot rely on general ethics statements to achieve the same effect. Unless the rules are operationalized in the main law, oversight may remain nominal, not functional.
What ultimately happens to privatisation proceeds?
Here lies one of the most consequential gaps. The 2025 Bill maintains that proceeds from government divestitures may form part of the Fund’s capital base.
Yet it is unclear whether those funds will automatically deposit into the SWF or first pass through the Consolidated Fund. If privatization revenues go through Treasury accounts before allocation, the temptation to repurpose them for short-term budget relief will be immense. Given Kenya’s anticipated privatization drive in 2026, this clarification is urgent.
Without explicit ring fencing, the SWF could lose its most credible source of capitalization before it even opens an account. The larger narrative: ambition versus discipline Kenya’s sovereign wealth fund remains an ambitious fiscal innovation, but it continues to hover between design and execution.
The Amendment Bill, 2025 demonstrates serious legislative intent—it acknowledges the earlier law’s weaknesses, rebuilds governance architecture, and anticipates public scrutiny. But a credible sovereign fund demands more than one well-drafted Act.
It requires enduring fiscal discipline and political restraint across administrations. Even with stronger oversight mechanisms, the absence of a realistic funding plan and clear operational frameworks leaves the initiative exposed to skepticism.
The question, then, is not whether Kenya should have a sovereign wealth fund—few dispute its long-term necessity—but whether the current economic environment and political culture can sustain it responsibly. Ultimately, the success of the Fund will depend on governance, not legislation.
A well-defined financing rule, a truly independent Board, transparent performance reporting, and strict adherence to international accountability standards could build confidence in time.
But those commitments must be lived, not legislated. Until then, Kenya’s sovereign wealth ambition remains aspirational—a declaration of intent awaiting the fiscal stability and institutional discipline required to make it real.
The writer is a Wharton MBA and Corporate Finance Executive in New York
