Time for Kenya to incorporate an infrastructure development bank

Kenya is at a pivotal moment in its development journey. With growing demand for high-quality infrastructure in energy, transport, housing, water, health, education, housing and ICT, the country faces a widening financing gap.

Despite efforts to attract both public and private investments, project delivery often lags due to limited access to long-term capital and fragmented institutional support.

A compelling solution lies in the consolidation of existing government investments in the development and banking sectors into a single, robust Kenya Infrastructure Development Bank.

This would entail adopting a national infrastructure financing vehicle model built to mobilise long-term capital and expertise for infrastructure development, offering a centralised platform with the technical, financial, and institutional capacity to support large-scale, transformative projects.

Kenya can take inspiration from such a model and move to establish its own version by merging institutions such as the Consolidated Bank of Kenya, Kenya Development Corporation and investments in the Kenya Commercial Bank and others into one infrastructure-focused development bank.

International examples offer strong justification for the proposed move. India’s National Bank for Financing Infrastructure and Development, the National Wealth Fund (former UK Infrastructure Bank), South Africa’s Development Bank of Southern Africa, and Brazil’s Development Bank (BNDES) have all demonstrated the benefits of centralised, well-capitalised infrastructure banks. These institutions have played a critical role in driving national development agenda, coordinating funding streams, and delivering large-scale impact.

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The rationale for consolidation is clear; currently, several State-owned financial institutions operate with overlapping mandates, often leading to inefficiencies and underutilisation of resources.

A unified institution would streamline these functions, reduce administrative costs, and increase the scale and visibility of Kenya’s infrastructure financing efforts.

With a focused mandate, the new bank would be better positioned to mobilise domestic savings, particularly through pension funds, and attract concessional financing and technical assistance from international development partners.

A dedicated Kenya Infrastructure Development Bank would operate with a clear focus on infrastructure finance and public-private partnerships (PPPs). It would function with operational autonomy, while the government retains majority or full ownership.

This would help ensure political alignment without compromising professional management and sound corporate governance. Operational independence is particularly important in building trust with investors and development partners, as well as in ensuring efficient project delivery.

The bank could deploy a range of innovative financial instruments that traditional commercial banks are often reluctant to offer. These could include infrastructure debt vehicles supported by pension funds, risk-sharing arrangements with local banks, concessional loans, and credit enhancement tools.

The institution would be designed to take higher, more strategic risks than conventional financial institutions, thereby unlocking financing for greenfield projects and sectors that are underserved by the private market.

Additionally, the bank would be well placed to support Kenya’s PPP agenda, strategically incentivising local financing to support infrastructure development.

Working closely with the Directorate of PPP and government contracting authorities, it could provide early-stage financing, help structure and de-risk complex projects, and offer long-term financing support.

This would greatly improve the bankability of infrastructure projects and crowd in private capital, especially from institutional investors looking for well-prepared opportunities.

Beyond financing, the creation of a centralised infrastructure bank would help embed long-term environmental and social considerations into project design and execution.

By including environmental and social provisions in its operational framework, the bank could ensure that infrastructure development remains inclusive, sustainable, and aligned with national and global climate goals.

To realise this vision in Kenya, the government should begin by undertaking a legal and policy review to facilitate the consolidation of relevant development finance institutions.

Adequate capitalisation of the new entity will be key, with contributions from the national treasury, domestic pension schemes, and international development partners.

Read: The next frontier for impactful PPP projects

The success of the institution will also depend on the appointment of a skilled, independent board and management team, as well as the development of a strategic investment framework aligned with Kenya’s long-term development goals.

Kenya’s ambitions for infrastructure-led growth cannot be achieved through fragmented efforts. The creation of a Kenya Infrastructure Development Bank would be a bold but necessary step toward transforming the financing landscape.

It would create a homegrown solution capable of unlocking investment, delivering large-scale projects, and driving inclusive, sustainable growth across the country. With vision and determination, Kenya can set a new benchmark for infrastructure financing in the region.

The writer is the CEO of Miundo Misingi Hub.