Kenya is setting up a sovereign wealth fund and an infrastructure fund, President William Ruto said, to invest in key sectors without repeating a debt binge that has strained public finances in recent years.
The East African nation has one of the highest debt repayments to revenue ratios on the continent, after it ramped up borrowing to construct infrastructure over the past decade.
“We are in the process of having two important funds. One, infrastructure fund, and the other, which we are going to roll out, sovereign wealth fund,” Ruto said over the weekend.
Lawmakers have pushed through a law governing privatisation of state assets, he said, giving the government an opportunity to raise funds to set up the two vehicles.
“As responsible citizens of the present, we must think about the generations of tomorrow and we must keep for them something, so that tomorrow, they have a place to start,” he said.
The privatisation drive will kick off with the sale of shares in Kenya Pipeline Company, a state firm that manages petroleum products’ transportation infrastructure in Kenya and into neighbouring states.
The share offer is expected to raise as much as 130 billion shillings ($1.01 billion), Ruto said.
The infrastructure fund will be used to boost farming – the biggest economic sector in Kenya – especially to improve production of crops so some can be exported, Ruto said.
Funds will also be used to increase electricity production, the president said, adding Kenya, which has a generation capacity of 2,300 megawatts of power, requires a minimum of 10,000 megawatts in new production in order to industrialize.
“For far too long we have been on an average trajectory and that is why we are not making progress,” he said.
Ruto did not give details on when the funds would become operational.
