Kenya is set to ringfence future earnings from oil and minerals through a sovereign wealth fund split into three dedicated accounts: Stabilisation, Strategic Infrastructure Investment, and Future Generations. The idea is fairly straightforward, protect savings, bankroll priority projects, and cushion the economy when revenue dips.
Under the draft Sovereign Wealth Fund Bill, 2026, at least 10% of inflows will be reserved for future generations, while the stabilisation fund will have a ceiling of KSh 10 billion unless increased by the Cabinet Secretary. The infrastructure arm will channel funds into key sectors such as transport, energy, housing, and healthcare, drawing from transfers and half of its own income, with withdrawals linked to the stabilisation fund’s balance.
The fund will take a cautious investment approach, limiting itself to foreign, liquid, investment-grade assets and steering clear of domestic markets and higher-risk options like private equity or real estate.
Revenue sources will include the government’s share of oil profits, mineral royalties, signing bonuses, mining rights payments, income from state stakes in projects, and proceeds from asset sales. In Turkana’s oil fields, Kenya’s share is expected to climb from 50% in the early stages to 75% at peak production.
All proceeds will first be deposited into a Central Bank holding account before being distributed across the three funds within ten days.
Each account comes with tight investment rules. The future generations fund will focus on highly rated international instruments, while the stabilisation fund may also use derivatives for risk management. The infrastructure fund will stick to foreign currency debt and interest-bearing deposits.
Crucially, the fund cannot be used as collateral or to extend loans to the government or other entities, insulating it from political and fiscal interference.
With Kenya grappling with a heavy debt burden and limited room for development spending, the fund, alongside the National Infrastructure Fund, is intended to steady public finances and ensure consistent investment in major projects.
Oversight will be handled by a seven-member board and a competitively selected CEO, including senior government officials and independent members. Any withdrawals must meet fiscal rules, gain Cabinet approval, and be presented to Parliament.
The bill also comes down hard on misuse. Offenders risk repaying twice the lost amount, fines starting at KSh 10 million, and up to five years behind bars, even after leaving office.
To prevent political meddling, no withdrawals will be allowed in the three months leading up to a general election, and the board must regularly report to the Auditor-General and Parliament.
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In the event of a severe and sustained drop in resource revenues, defined as a 90% decline over two years, the three accounts will be merged, with withdrawals restricted to earnings to preserve the core fund.
Regular financial reporting will be mandatory, and interim measures will allow the Treasury to set up management structures before the board is fully in place, alongside legal amendments to ensure all resource revenues are properly channelled into the fund.
