Every budget season, Kenya returns to the same familiar debate: should government borrow more or tax more to finance development? Both are legitimate tools of public finance, but they overlook a more important question: can Kenya finance more of its future through wealth it deliberately builds and invests?
For decades, Kenya has relied on taxes to meet today’s obligations and debt to bring tomorrow’s income into the present. What has been missing is a national mechanism for converting public assets and long-term revenues into wealth that generates returns for future generations.
The Sovereign Wealth Fund Act, No. 25 of 2026, offers that opportunity. It provides Kenya with a legal framework to build, invest and preserve national wealth over the long term. More importantly, it signals a shift from managing annual budgets to managing the country’s balance sheet.
The significance of the law is not simply that Kenya now has a sovereign wealth fund. For years, the idea existed only in policy papers and conference discussions. Parliament has finally turned that ambition into law, creating the foundation for a long-term wealth architecture.
The world’s best sovereign wealth funds show that lasting prosperity is built on institutions, not windfalls.
Norway transformed oil revenues into the world’s largest sovereign investment fund, preserving wealth long after its natural resources are depleted. Singapore, with almost no natural resources, built globally respected investment institutions by professionally managing state assets.
Botswana used diamond revenues to build national savings, while the United Arab Emirates is investing hydrocarbon wealth into technology, logistics and infrastructure.
Closer home, Angola’s sovereign wealth fund has adopted a strategy that combines liquid investments with productive sectors of the economy under internationally recognised governance standards known as the Santiago Principles. The lesson is clear: sovereign wealth is less about where capital comes from than how it is governed and compounded.
Kenya’s starting point is different. We do not have Norway’s oil or Botswana’s diamonds. But we do have valuable public enterprises, growing pension savings, an expanding digital economy, sophisticated capital markets and one of Africa’s strongest financial sectors. Most importantly, we have a young and increasingly skilled population.
People are often viewed as a fiscal burden because they require schools, healthcare and jobs. History suggests otherwise. China’s economic transformation was powered not by natural resources but by sustained investment in people, productivity and infrastructure.
Kenya’s youthful population can become a similar long-term asset if institutions convert today’s productivity into tomorrow’s wealth.
That requires thinking beyond a single sovereign wealth fund towards a broader sovereign wealth architecture.
A sovereign wealth fund should receive clearly defined sources of national capital, invest them professionally and reinvest returns over generations. Initial capital need not come from a single resource discovery. It can be built gradually from dividends earned by commercially viable state enterprises, returns from strategic public assets and other dedicated public revenues protected from day-to-day spending.
This should complement—not replace—existing institutions. Pension funds must continue protecting retirement savings. Public investment vehicles should remain independently governed. Capital markets should keep attracting private investment. The sovereign wealth fund would connect these pillars, creating another source of long-term national capital.
The real value lies in reducing pressure on taxpayers and future borrowing. Instead of financing every development priority through new debt or higher taxes, Kenya would begin financing more investment through returns generated by assets it already owns.
That is a fundamental shift in public finance. Not every shilling government earns should be spent immediately. Some should be invested, allowed to grow and preserved for future generations.
If Kenya embraces that discipline, future budget debates may become less about choosing between taxes and debt, and more about how effectively the country is growing the wealth it already possesses.
Dr Jonah Aiyabei is the Chief Executive Officer of the Public Service Superannuation Fund
