Members of Parliament have dismissed a proposal to channel part of Kenya’s planned Sovereign Wealth Fund towards servicing the country’s growing public debt, maintaining that the fund should remain focused on long term investment and national savings.
The National Assembly’s Finance and National Planning Committee rejected an amendment by Embakasi West MP Mark Mwenje that sought to establish a Public Debt Component within the fund. The proposal also aimed to tighten legal safeguards against using the fund to finance government borrowing.
Instead, lawmakers retained the Bill’s original framework, which consists of three pillars: the Stabilisation Component, the Strategic Infrastructure Investment Component, and the Future Generations Component.
The Sovereign Wealth Fund is intended to invest future earnings from petroleum and mineral resources in foreign liquid assets to cushion the economy against shocks, finance strategic infrastructure projects, and build long term national savings.
Mwenje’s proposal would have diverted 30 per cent of the fund’s allocations to debt repayment, refinancing and redemption. Under his suggested formula, 20 per cent would have gone to stabilisation, 40 per cent to infrastructure, at least 10 per cent to future generations, with the balance earmarked for debt servicing.
The proposal comes as Kenya’s public debt has surpassed KSh13 trillion, with the debt-to-GDP ratio approaching 72 per cent, placing increasing pressure on government finances and limiting funding for essential public services.
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The committee also strengthened protections around the Future Generations Component by maintaining restrictions that prevent it from issuing loans, advancing funds to government entities or being used as collateral for public borrowing. The move is intended to shield a portion of the country’s future resource wealth from short term fiscal demands.
In addition, MPs rejected proposals to channel Sovereign Wealth Fund revenues through the Consolidated Fund before investment. The committee argued that keeping the fund separate from the annual budget process protects long term savings from being diverted to recurrent government expenditure. The Bill therefore preserves the existing structure, under which resource revenues are first deposited into a Central Bank holding account before allocation across the fund’s three components.
Lawmakers also expanded oversight by requiring approval from the Controller of Budget for withdrawals from all three components of the fund, rather than limiting this requirement to the Stabilisation Component.
At the same time, the committee broadened the conditions under which the government can access the Stabilisation Component. Rather than specifying a fixed list of extraordinary events, the revised provisions allow withdrawals in response to any shocks that could threaten macroeconomic stability, giving the Treasury greater flexibility.
The amendments further clarify the handling of mineral royalties by requiring revenues collected by the relevant government department to be remitted to the Commissioner-General of the Kenya Revenue Authority before being transferred into the Sovereign Wealth Fund.
Finally, MPs declined a proposal to specifically designate artificial intelligence and space technology as priority investment sectors. Instead, they opted for broader wording that allows the fund to invest in projects that promote inclusive economic growth while attracting private sector investment.
