The Consumers Federation of Kenya (COFEK) writes further to the Committee’s invitation to the stakeholder engagement scheduled on 20th–21st August 2026, issued pursuant to Article 118(1)(b) of the Constitution and Standing Order 127(3). COFEK thanks the Committee for the opportunity and, having reviewed Sessional Paper No. 7 of 2026, the National Infrastructure Fund Act, 2026 (Act No. 4 of 2026) and its consequential amendments, hereby records its full, unqualified and in toto opposition to the National Infrastructure Fund (“NIF” or “the Fund”) as currently constituted, structured and governed. This submission sets out the constitutional, statutory and jurisprudential basis for that opposition grounds, and proposes alternative pathways for infrastructure financing that are consistent with the Constitution of Kenya, 2010.
1. EXECUTIVE SUMMARY
COFEK’s opposition to the NIF is not opposition to infrastructure development. It is opposition to a financing architecture that, in COFEK’s considered view, was constructed to route trillions of shillings — including citizens’ pension savings, privatisation proceeds and public assets — outside the constitutional discipline of the Consolidated Fund, outside the annual appropriation process, and outside the standard of meaningful public participation that the Constitution and this Committee’s own precedent decisions demand.
The Fund’s structure raises live constitutional questions under Articles 10, 43, 201, 206, 210, 225, 226, 228 and 229, mirrors defects the courts have already struck down in analogous “special purpose fund” legislation, and exposes ordinary Kenyans — as pension contributors, taxpayers and consumers of public services — to risk without commensurate consent, disclosure or recourse.
2. CONSTITUTIONAL GROUNDS OF OPPOSITION
2.1 Article 206 — Bypass of the Consolidated Fund
Article 206(1) of the Constitution requires that all money raised or received by or on behalf of the national government be paid into the Consolidated Fund, unless an Act of Parliament excludes that money and provides for its retention for a defined purpose in a fund established for that purpose.
Section 54 of the Privatization Act has been amended by the NIF Act to substitute the words “Consolidated Fund” with “National Infrastructure Fund” — meaning that proceeds from the sale of public assets, which previously would have returned to the Consolidated Fund and been subject to appropriation by Parliament, will now flow directly into a Fund managed by a Governing Council and Board largely insulated from the ordinary budget cycle.
COFEK submits that this is precisely the pattern of constitutional infirmity that Kenyan courts have already condemned.
2.2 Article 201 — Principles of Public Finance
Article 201 requires openness, accountability and public participation in financial matters; prudent and responsible use of public money; and a financial system promoting an equitable society.
A Fund permitted to mobilise pension savings, sovereign wealth and privatisation proceeds into commercial infrastructure investment — while remaining, on its own design, largely outside line-item parliamentary appropriation — does not meet the openness and accountability threshold Article 201 demands.
2.3 Article 210 — No Taxation or Public Levy Without Clear Legal Authority and Framework
Where the Fund’s capitalisation is to be supplemented by public levies, fees or mandatory contributions, Article 210 requires an unambiguous legislative basis.
The pattern of first legislating the vehicle and only later prescribing the detailed investment and risk framework through a Sessional Paper — rather than through the primary Act itself — inverts the constitutional sequence and denies Parliament and the public the opportunity to scrutinize the substance of the framework before the vehicle is already operational.
2.4 Articles 225, 226, 228 and 229 — Financial Control, Audit and Oversight
The Auditor-General’s mandate under Article 229 and the Controller of Budget’s mandate under Article 228 are constitutionally anchored in the flow of funds through the Consolidated Fund and public funds subject to appropriation.
A Fund structured as a body corporate entering commercial arrangements, holding equity, and acting as agent for government entities creates a governance layer that dilutes real-time parliamentary and constitutional oversight to ex-post annual reporting — well after capital has already been committed and potentially lost.
2.5 Article 43 — Socio-Economic Rights and Pension Security
To the extent the Fund is designed to attract capital from domestic pension schemes, COFEK is gravely concerned about the socio-economic rights implications for retirees under Article 43.
Pension trustees owe fiduciary duties to scheme members that cannot be subordinated to a national infrastructure financing agenda, however well-intentioned. Kenyans’ retirement savings should not be deployed as patient capital for projects whose commercial viability, risk profile and exit mechanisms have not been independently stress-tested and disclosed to contributors.
3. STATUTORY GROUNDS OF OPPOSITION
3.1 Public Finance Management Act, 2012, sections 24 and 26 — governing the establishment and administration of public funds outside the Consolidated Fund — require a clear legislative framework, ring-fenced purpose and Cabinet Secretary accountability. Sessional Paper No. 7, as subsidiary policy rather than binding law, cannot cure gaps in that framework.
3.2 The National Infrastructure Fund Act’s own section 4 objectives — to mobilize private capital and reduce reliance on public debt — are legitimate policy goals, but the Act’s design (a body corporate barred from borrowing yet empowered to enter agreements, accept security and act as government’s agent) creates contingent and off-balance-sheet exposures that fall outside conventional public debt reporting under the Public Finance Management Act and the Public Debt Management framework.
3.3 The Retirement Benefits Act and RBA investment guidelines impose prudential caps on scheme exposure to alternative and illiquid assets precisely because infrastructure investment carries long horizons, political risk and limited exit liquidity. COFEK is not aware of any amendment to those guidelines that has been subjected to the same standard of public participation as this Sessional Paper claims to satisfy.
3.4 The Privatization Act amendment (redirecting proceeds from the Consolidated Fund to the NIF) requires, in COFEK’s view, a freestanding constitutional justification that has not been demonstrated — see Section 2.1 above.
4. RELEVANT DECIDED CASES
COFEK draws the Committee’s attention to Kenyan jurisprudence directly on point, decided in the context of comparable “special purpose fund” legislation:
Okiya Omtatah Okoiti & 51 Others v Cabinet Secretary for the National Treasury and Planning & 3 Others [2023] KEHC 25872 (KLR): the High Court declared the Affordable Housing Levy framework unconstitutional for violating Articles 10, 201, 206 and 210, holding that money earmarked and collected for a stated purpose must be paid into a public fund lawfully established for that purpose, with a comprehensive legal framework governing its collection, custody and expenditure. The Fund’s proceeds could not lawfully bypass the Consolidated Fund absent that framework. COFEK submits the NIF’s redirection of privatization proceeds and prospective levy income exhibits the identical constitutional defect.
Okiya Omtatah Okoiti & another v Uhuru Muigai Kenyatta & 7 Others [2016] KEHC 7365 (KLR) (the Eurobond case): the High Court held that depositing public loan proceeds outside the Consolidated Fund, without demonstrated parliamentary approval and adherence to Article 206 and section 50(7) of the then Public Finance Management Act, raised triable constitutional questions of general public importance concerning transparency and accountability for public funds held outside the ordinary constitutional channel.
Mui Coal Basin Local Community & 15 Others v Permanent Secretary Ministry of Energy & 17 Others [2015] eKLR: the Court of Appeal held that public participation must be real, quality engagement — not a cosmetic or perfunctory exercise — and that government bears the burden of demonstrating that participation was substantive. COFEK submits that a policy of this financial magnitude (up to Sh5 trillion over a decade) cannot be adequately tested through a two-day stakeholder session on a Sessional Paper published after the enabling Act has already been assented to.
British American Tobacco Kenya, PLC v Cabinet Secretary for the Ministry of Health & 5 Others [2019] eKLR (Supreme Court): the Supreme Court articulated the standard for meaningful public participation, holding that reasonable opportunity must be given to affected persons to be heard and to have those views considered before, not after, key policy or legal choices are locked in. Here, the enabling Act preceded the substantive investment policy, inverting that sequence.
Institute of Social Accountability & another v National Assembly & 4 Others [2015] eKLR: the High Court, in striking down aspects of the CDF Act, held that special funds administered outside ordinary devolved and national budget-making processes must nonetheless satisfy the constitutional principles of accountability, equity and separation of budget-making authority. The reasoning applies with equal force to a fund of national scale operating a parallel investment and procurement track alongside the ordinary PPP and public procurement architecture.
5. THE ECONOMIC CASE AGAINST THE FUND AS STRUCTURED
Independent economic analysis reinforces COFEK’s constitutional objections. Kenya’s binding fiscal constraint is debt service relative to revenue, and its 2023–2025 IMF Extended Fund Facility commitments were anchored on achieving a primary surplus. Analysts have noted that using windfall proceeds — such as those now redirected to the NIF — to retire existing high-interest public debt would deliver a risk-free double-digit return and durable fiscal space, compared with warehousing the same proceeds in a new investment vehicle whose commercial returns, risk-adjusted, remain unproven and whose governance sits outside standard fiscal reporting. COFEK considers it fiscally reckless to forego a certain debt-reduction dividend in favour of a speculative sovereign investment vehicle with no track record.
6. CONCLUSION ON OPPOSITION
For the reasons above, COFEK opposes the National Infrastructure Fund, and Sessional Paper No. 7 of 2026 which seeks to operationalize it, in toto. The defects identified are not curable by administrative guidelines or Board charters; they are structural and constitutional, requiring legislative correction before any further capital — least of all Kenyans’ pension savings — is committed.
7. COFEK’S RECOMMENDATIONS AND ALTERNATIVES
Should Parliament nonetheless proceed with an infrastructure financing reform agenda, COFEK recommends the following alternative pathway:
- Retire expensive public debt first. Direct privatization and windfall proceeds to debt buy-back through the existing Consolidated Fund and Public Debt Management framework, capturing the certain fiscal dividend identified in Section 5 above, before diverting proceeds to a new speculative vehicle.
- Route infrastructure financing through the existing Public Private Partnerships Act, 2021 framework, which already contains project-level appraisal, procurement and disclosure safeguards, rather than creating a parallel body corporate with weaker appropriation linkages.
- If a dedicated Fund is retained, re-anchor it squarely within Article 206(1)(a) as a public fund established by an Act with a comprehensive legal framework — as the courts required in the Housing Levy litigation— including a statutory ceiling on off-Consolidated-Fund retention, mandatory quarterly reporting to the Controller of Budget, and real-time Auditor-General access to Fund books.
- Make pension fund participation strictly opt-in and subject to informed member consent, full risk disclosure, and continued adherence to existing RBA prudential caps on alternative and illiquid assets — never presumed or default inclusion of scheme assets.
- Require project-level (not merely policy-level) public participation for any single investment above a defined materiality threshold (for example, Sh10 billion), consistent with the quality-of-participation standard set in Mui Coal Basin and British American Tobacco Kenya.
- Reverse the amendment to section 54 of the Privatization Act, restoring the default rule that privatization proceeds are paid into the Consolidated Fund and appropriated by Parliament in the ordinary way, unless a specific, ring-fenced exception is separately justified and legislated.
- Guarantee independent public-interest and consumer representation — including a nominee of consumer protection bodies such as COFEK — on the Fund’s Governing Council, to ensure citizen oversight of an investment vehicle deploying citizens’ own capital.
- Publish, ahead of any further capital mobilization, a comprehensive and independently audited risk framework covering credit, liquidity, political and currency risk, with clear loss-absorption and exit provisions disclosed to Parliament and the public.
COFEK remains available to appear before the Committee to elaborate on this submission, if and when deemed necessary. Thank you.
