NAIROBI, Kenya, Jul 28 – Kenya is preparing to unlock trillions of shillings in pension savings to help finance major infrastructure, manufacturing and county development projects in what could become one of the biggest shifts in the country’s investment landscape.
With pension assets now standing at Sh2.81 trillion, the government believes retirement savings can play a much bigger role in building roads, industrial parks, railways, power projects and affordable housing while still generating attractive returns for millions of workers.
The strategy has gained fresh momentum following the enactment of the National Infrastructure Fund Act, 2026, which creates a new vehicle for mobilizing long-term capital from pension funds, sovereign wealth funds, development finance institutions and private investors into strategic national projects.
If successful, the initiative could transform how Kenya finances development while reducing pressure on public borrowing.
It also raises a fundamental question: can pension savings safely finance the projects needed to drive Kenya’s next phase of economic growth without compromising contributors’ retirement security?
Why pension funds matter
For decades, pension schemes have invested the bulk of contributors’ savings in government securities, equities and property.
According to industry data, government securities account for more than half of pension assets, while infrastructure, manufacturing and alternative investments make up only a small share of portfolios.
Supporters argue that this conservative approach has protected retirement savings but may also have limited the ability of pension capital to support productive sectors capable of generating jobs, expanding industries and stimulating long-term economic growth.
Financial experts say pension funds are naturally suited to financing long-term projects because contributors accumulate savings over decades before retirement, allowing fund managers to invest in assets that mature over similar timeframes.
Speaking during aNairobi fund managers’ conference in January, Financial Sector Deepening Africa CEO Mark Napier observed that pension funds across Africa continue allocating most of their assets to government securities rather than productive investments.
“In Kenya and many African markets, investment in government securities can be as high as 86 per cent or even 90 per cent,” Napier said.
Retirement Benefits Authority (RBA) Chief Executive Officer Charles Machira has similarly argued that while government securities provide stability, excessive concentration in a single asset class also presents investment risks.
“The heavy focus on government securities gives stability but also creates risks if too much is tied to one area,” Machira said.
The debate is no longer whether pension funds should diversify, but how they can do so while protecting contributors’ savings.
Financing Kenya’s infrastructure gap
The National Infrastructure Fund Act, 2026 is intended to provide that opportunity.
The law establishes a dedicated investment vehicle capable of mobilizing pension savings and other long-term capital into nationally significant projects including highways, railways, airports, ports, electricity generation and transmission networks, ICT infrastructure, irrigation schemes and agribusiness facilities.
Government estimates that every shilling invested through the fund could leverage up to Sh10 in additional financing from pension funds, development finance institutions and private investors.
President William Ruto has described the fund as a game changer for infrastructure financing.
“Every shilling invested through the Fund is expected to crowd in up to Sh10 additional shillings from long-term investors, including pension funds, sovereign partners, private equity funds and development finance institutions,” Ruto said.
The legislation establishes a governing council chaired by the National Treasury Cabinet Secretary, with the Central Bank Governor and Attorney-General among its members. Every project financed through the fund must also undergo an approved feasibility study before investment decisions are made.
The government’s long-term objective is to mobilize nearly Sh5 trillion over the next decade to finance thousands of kilometres of roads, railway expansion, airport modernization, energy projects and other strategic infrastructure.
Treasury Cabinet Secretary John Mbadi has similarly presented the National Infrastructure Fund Act, Sovereign Wealth Fund Act, Government-Owned Enterprises Act and Privatisation Act as complementary reforms intended to strengthen Kenya’s investment architecture.
Can pension funds also revive manufacturing?
Infrastructure is only one part of the government’s vision.
Officials increasingly see pension capital as a potential source of patient financing for manufacturing, industrial parks and Special Economic Zones, sectors that often require substantial upfront investment before generating returns.
Unlike commercial bank lending, which is generally shorter-term, pension funds can invest over much longer horizons, making them potentially well suited to financing industrial developments whose returns accumulate gradually.
Manufacturing also remains central to Kenya’s Vision 2030 agenda, with government seeking to increase the sector’s contribution to Gross Domestic Product through value addition, export-oriented industries and industrial parks.
Potential investments include industrial parks, Special Economic Zones, export-processing zones, logistics parks and mixed-use developments such as the proposed Sh507.4 billion Mavoko Smart City in Machakos County, which will include housing, industrial zones and commercial centres.
Beyond Nairobi: Can pension capital transform county development?
The government’s ambitions extend beyond national infrastructure.
County governments continue facing significant financing constraints for markets, affordable housing, water systems, industrial parks and urban infrastructure.
If properly structured, pension-backed investments could provide counties with an alternative source of long-term financing for commercially viable projects capable of generating predictable returns.
Supporters argue that such investments could accelerate regional economic development while reducing dependence on national transfers.
Critics, however, caution that only projects supported by robust governance, transparent procurement and sustainable revenue streams would be appropriate for retirement savings.
The proposed Mavoko Smart City in Machakos County, alongside commercially viable markets, industrial parks, affordable housing and urban infrastructure, illustrates the type of county projects that could attract long-term pension investment if structured to deliver sustainable returns.
Globally, pension funds have become important sources of long-term capital for infrastructure and economic development.
Large retirement funds in countries such as Canada, Australia and the Netherlands routinely invest in transport infrastructure, renewable energy, utilities, commercial real estate and other long-lived assets that generate stable returns over decades.
Those investments reflect the natural alignment between long-term pension liabilities and infrastructure assets with predictable income streams.
For Kenya, the question is not whether pension funds can finance development, but whether appropriate governance structures and investment safeguards are in place to protect contributors while delivering competitive returns.
The safeguards
Supporters of the National Infrastructure Fund argue that the legislation incorporates several protections designed to safeguard contributors’ money.
Projects financed through the fund must undergo feasibility studies and investment appraisal before capital is committed, while the governance structure brings together several public institutions responsible for oversight.
Nevertheless, infrastructure investments inevitably carry construction, operational and political risks that differ from those associated with traditional government securities.
Industry observers argue that diversification, professional fund management and strong governance will ultimately determine whether pension-backed infrastructure investments deliver both economic development and secure retirement incomes.
Kenya’s largest pension fund, the National Social Security Fund (NSSF), has already begun expanding into larger infrastructure and real estate investments.
Among its most significant proposals is an investment of up to Sh30 billion in the Rironi–Mau Summit Toll Road, where the fund expects annual returns of about 17 percent.
NSSF board members argue that properly structured infrastructure projects can generate sustainable returns while supporting national development.
The fund is also spearheading the proposed Sh507.4 billion Mavoko Smart City project in Machakos County, incorporating housing developments, industrial zones and commercial centres.
If implemented successfully, the development could become one of Kenya’s largest demonstrations of how pension capital can support county development, manufacturing and urban growth simultaneously.
Whether pension funds become a major engine of Kenya’s development will depend less on the availability of capital than on the quality of projects seeking that capital.
With one of East Africa’s largest pools of long-term domestic savings, Kenya’s challenge is no longer finding capital but channeling it into commercially viable investments that generate competitive returns for contributors while financing the infrastructure, manufacturing and county projects needed to drive economic transformation.
For policymakers, the National Infrastructure Fund represents an opportunity to unlock domestic capital for national development.
For pension contributors, however, the measure of success will remain unchanged: whether their retirement savings continue to grow securely while helping build the country’s future.
