Kenya has become a saving nation. A generation ago, most retirement savings sat in an underfunded provident fund and a few large occupational schemes.
Today, the Retirement Benefits Authority’s June 2026 industry brief reports total pension assets under management of Sh3.2 trillion, surpassing the Sh3 trillion mark for the first time.
This massive capital pool now accounts for 17.64 percent of Kenya’s GDP, climbing steadily from 16.05 percent in December 2025. Kenya’s banking sector holds a further Sh8.9 trillion in assets.
Add insurance, collective investment schemes and individual savings, and the picture is of a country that has quietly built one of sub-Saharan Africa’s largest domestic capital pools.
Pension funds invest 52.14 percent of their trillions in government securities, while 18.59 percent is in guaranteed funds. Despite this, infrastructure, which Kenya claims it can’t finance, makes up for approximately 0.02 percent of the portfolio.
There is still inadequate allocation to infrastructure within the pensions scheme compared to the regulatory ceiling of 10 percent. Recommendations have suggested revising this to 30 percent. Nonetheless, the current allocations are insignificant when compared to both the existing regulatory ceiling and the recommended one.
Pension trustees are expected to consider their fiduciary duty to members. They operate much like a corporate board. The scheme’s investment committee, made up of the pension trustees, consults with fund managers who must prove to the committee that the project can deliver predictable returns within a certain time frame.
The fiscal space has narrowed. Traditionally, Kenya has funded development activities through annual government budgets, sovereign borrowing, development finance institutions, and public-private partnerships (PPPs). While each plays a role, none can fund infrastructure projects alone.
The country’s debt stood at around Sh12.3 trillion at the end of 2025, up from Sh9.15 trillion at the end of 2022. Debt service will amount to Sh1.5 trillion out of the proposed Sh4.8 trillion budget for 2026/27.
The national budget should fund what only it can: schools, hospitals, community roads, and water points that serve the public but do not generate enough revenue to attract private capital. Commercially viable infrastructure, such as toll roads, airports, ports, energy facilities, and the digital backbone, should shift to a model that attracts equity and debt based on future revenues rather than future taxes.
McKinsey identified a paradox in Africa’s infrastructure markets: funding is available, the pipeline is large, and the need is clear, but 80 percent of projects fail at the feasibility and business-plan stage, and fewer than 10 percent reach financial close. In many cases, projects stall before investors can assess or finance them.
Kenya illustrates this gap: the PPP Directorate’s April 2026 status report lists 51 projects valued Sh1.7 trillion. Of these projects, 10 are in the implementation stage, meaning financing, contract signing, and construction are underway.
The remaining 41 projects, which make up more than 80 percent of the Sh1.7 trillion project pipeline, are still at various stages of preparation, procurement, or approval.
Since the establishment of PPP in 2013, Kenya has mobilised only $ 1 billion in private capital over 13 years.
The IMF indicates that almost half of more than 1,000 government-implemented projects stalled because of the Sh1 trillion required to implement them. Development expenditure was 58.3 percent of plan in March 2026 and just 37 percent in the first half of 2025/26. Unspent allocated funds are not a fiscal constraint.
An infrastructure project must pass tests unrelated to its ambition to attract institutional funding. The land should be legally owned, with no competing claims. The project’s demand should be analysed using objective data, not the ministry’s estimate.
The revenue should be secured through enforceable contracts or regulations. Risk, construction, operation, revenue shortfall, and currency should be distributed so that both equity and debt investors find it acceptable. Multilateral lenders require an environmental and social impact analysis that aligns with their standards.
Management should be able to implement the project.
Project preparation for developing countries usually takes 5-10 per cent of the project’s total value, but limited development budgets often make it the first thing sacrificed. As a result, projects are announced but never reach financial close because they were not properly prepared.
Financial close is an important accomplishment. This does not mark the end of the process. A pension fund which is investing in projects for fifteen or twenty-five years is not bidding on a construction contract.
The fund is bidding for the project’s entire operating life: the effectiveness of tariff adjustment mechanisms, the ability of off-takers, and the longevity of the institutions and regulations governing revenue streams over the concession period.
Kenya’s PPP regime, grounded in the PPP Act and implemented by the PPP Directorate, has increasingly laid the foundations for this: long-term commitments backed by sovereign governments to deliver predictable returns over the full life of the investment.
A case in point is the Nairobi Expressway project. This is a 27-year toll concession under Kenya’s PPP regime, with one of the best-structured termination clauses in sub-Saharan Africa and a transparent, agreed-upon method for compensating investors for the full investment period. The traffic numbers continue to confirm the demand assumptions.
The 2023/24 operating result testifies to the inflated costs of foreign-currency borrowing. For long-term capital providers, the Nairobi Expressway has catalysed the structuring conversation Kenya’s PPP market is now mature enough to have on behalf of the next generation of infrastructure investors.
Investors don’t demand a risk-free environment. They demand an environment where risks are explicitly identified, legally allocated, and separately manageable. The Kenyan institutional framework provides that structure, and Kenya’s track record of honouring long-term sovereign commitments across successive administrations reinforces it.
Well-designed first-loss coverage or risk guarantees will often be more effective than a coupon premium in attracting long-term financing because institutional investments are constrained by certainty, not yield. We are not after eliminating commercial risk for the investor, but rather ensuring that the risks on the investor’s balance sheet are ones it can price and that the mechanisms to manage them are ones it can rely on.
Contracts and institutions help hedge projects, but these must be resolved before capital is committed.
These consist of revenue floors which are capped, rule-based and transparent; conservative demand forecasts; payment security of the utility consumers, which is best done by development finance institutions; protection against tariff changes and changes in laws; termination provisions for all outstanding senior debts, which are enforceable; lender step-in rights and independent dispute resolution, which do not rely on the goodwill of the sitting government.
The role of investment banks
Investment banks sit between Kenya’s savings and its projects, and their value lies in making the second durable for the first. Banks can ring-fence revenues and design the vehicle, waterfall, reserve, and credit enhancement to withstand stress. They can assess a sponsor’s projections against conservative cases before investors do and advise government on terms that survive a change of administration, from tariff mechanisms to termination compensation.
They can present the project to the trustee’s investment committee in their language, find an anchor investor base, get the ratings, and list on the Nairobi Securities Exchange. But the process does not stop there. Reporting, surveillance, and recycling matured assets back into the capital markets help keep the structure honest, as long as the conflict between advising on and placing the same deal is handled openly.
Investment banks can add the structure that keeps those savings protected once the project is operational.