Kenya to Establish a KSh 200 Billion Sovereign Wealth Fund

Kenya Government has published the Draft Kenya Sovereign Wealth Fund Bill, 2025, which establishes a national fund to manage revenues from oil, gas, and minerals. The Fund will have an initial sum of KSh 200 billion, before it can become operational.

Through this fund, which will be managed by the Central Bank of Kenya(CBK) as the custodian, the Kenya Government seeks to stabilize the economy, finance strategic infrastructure, and save for future generations.

Kenya seeks to establish this fund to manage income from oil, gas and mineral resources. It will operate through three divisions; A Stabilization Fund to offset global oil price swings; Savings Fund for long term investments and a Development Fund, to finance public projects. The Fund will to shield  the country’s economy from commodity price shocks, secure savings for future generations and attract foreign investment.

Kenya joins Nigeria and Ghana, which have also established a sovereign wealth fund to manage revenue from extraction of natural resources, including crude oil and gas.

Objectives of the Wealth Fund

According to the Draft Kenya Sovereign Wealth Fund Bill, 2025, the purpose of the Fund shall be to provide the national government with a buffer from fluctuations in resource revenues or extraordinary macro-economic shocks; provide finance for strategic infrastructure investment priorities to foster strong and inclusive growth and development; and build a savings base for future generations when minerals and petroleum resources are exhausted.

Kenya Sovereign Wealth Fund Board and Management

The Sovereign Wealth Fund will be under a Board consisting of Composition of a Chairperson appointed by the President; the Principal Secretary to the National Treasury, the Governor of the Central Bank of Kenya and four other independent persons appointed by the Treasury Cabinet Secretary; and the Chief Executive Officer who shall be an exofficio member with no rights to vote.

CBK Domestic Borrowings to Finance Deficit Hits KSh 287.2 Billion

The proposed law prohibits the Fund from investing in speculative derivatives, unlisted real estate, private equity, art and commodities or any other instrument not prescribed by the Cabinet Secretary.

The Fund is also prohibited from lending to a national government entity, state corporation, county government entity, county corporation or any other legal or natural person. It cannot also act as collateral for any borrowing of a National Government entity, State Corporation, County Government entity, County Corporation or any other legal or natural person.

All monies held by the Fund shall be frozen three months to the General Elections, to be audited by the Auditor General and a report handed to the incoming President and Parliament.

According to the Sovereign  Wealth Fund Institute, the 3 largest wealth funds in the world, in terms of  assets, is Norway Government Pension Fund Global with a balance sheet size of US$2.04 trillion, followed by China Investment Corporation worth US$ 1.3 trillion and Abu Dhabi Investment Authority- US$ 1.1 trillion.

A sovereign wealth fund is a state-owned investment vehicle that manages a country’s financial assets. They are usually set up to manage forex reserves, save for pensions or infrastructure development and stabilize the economy against external shocks.