NAIROBI, Kenya, Aug 18 – The proposed Investment Policy for the National Infrastructure Fund (NIF) sets a minimum expected equity return of 7 percent and limits the fund’s exposure to individual sectors and projects.
The policy, currently before the National Assembly’s Finance and Planning Committee, proposes that no more than 40 percent of the Fund’s assets be invested in a single sector, while exposure to one project would be capped at 20 percent of the Fund’s assets.
Infrastructure projects financed through the Fund would also be required to have a minimum debt capacity of 60 percent through non-recourse project debt.
The policy further bars the Fund from undertaking balance-sheet borrowing, setting limits intended to manage financial risks as it invests in large infrastructure projects.
The NIF was established in March as a government investment vehicle to finance large-scale infrastructure by pooling public and private capital, reducing reliance on external borrowing and taxpayer funding.
Eligible projects under the proposed policy include national highways, railway networks, airports, seaports and electricity generation, transmission and distribution infrastructure.
The Fund would also invest in ICT infrastructure, water reservoirs, irrigation and agribusiness infrastructure.
It could finance projects through direct investments, equity, quasi-equity, debt instruments, project finance structures, special purpose vehicles, infrastructure funds and pooled investment vehicles.
The policy identifies commercial viability as the main investment test, with projects required to demonstrate sufficient demand before receiving funding.
Project preparation would also be a key function of the Fund, with resources allocated to developing projects to an investment-ready stage.
The proposed framework requires independent technical and financial assessments of investments and includes a political independence clause aimed at protecting investment decisions from political interference.
The policy also proposes a five-dimensional framework covering capital preservation, liquidity, income, project preparation and broader assessment of the Fund beyond financial returns.
Members of the public and other stakeholders have until August 24 to submit comments on the proposed policy.
