Policy Details
What Changes
National Infrastructure Fund Act 2026: Establishes the NIF as a state-owned limited liability body corporate, insulated from the annual budget cycle, with legal personality to enter complex financial arrangements with private investors. Mandates a five-year investment policy setting priority sectors, project pipelines and risk exposure limits. Places SGR extensions, expressways, airport expansions and power generation within the Fund's financing mandate. Finance Act 2026: VAT exemption on goods and services for National Infrastructure Fund projects. VAT exemption on plant and machinery for projects above KES 3 billion. VAT exemption on infrastructure PPP implementation. 100% first-year capital deduction for investments above KES 10 billion. 100% first-year investment allowance for petroleum and gas storage facilities above KES 10 billion. CGT and stamp duty exemption on property transfers into REITs. Expanded KRA enforcement powers. Tightened withholding tax obligations for cross-border investors. Import documentation requirements effective September 2026.
Who Is Affected
Every infrastructure developer, project financier, PPP sponsor, and capital provider active in Kenya. Directly relevant to: Kenya SGR Phase 2B & 2C financing, JKIA expansion, LAPSSET corridor, and the 51 PPP projects in Kenya's active pipeline. Also affects multinational companies investing above KES 3 billion thresholds and real estate investment trusts. Foreign investors in Kenyan extractive industries face new tax treatment from January 2027.
Why It Matters
The NIF and Finance Act 2026 together represent the most significant restructuring of Kenya's infrastructure financing architecture in a decade. The NIF directly shapes how SGR Phase 2B, JKIA, and future energy projects are financed — moving Kenya away from sovereign debt toward investment-asset structuring with private capital. The Finance Act's 100% first-year deduction for investments above KES 10 billion is a material incentive for exactly the class of investors your audience tracks. Kenya is positioning itself as East Africa's primary infrastructure investment hub, and these two laws define the terms of that positioning.
Expected Impact
Progressive migration of large-scale Kenya infrastructure from sovereign-debt funding to NIF-structured investment assets with defined revenue streams. Growing PPP pipeline — 51 projects currently active with 41 in preparation. Kenya cementing its position as East Africa's PPP and infrastructure finance hub, reinforced by hosting the 16th Africa PPP Summit in Nairobi in November 2026. 100% capital deduction threshold expected to accelerate investment decisions for projects above KES 10 billion that were previously marginal on after-tax returns.
Risks / Uncertainties
NIF's effectiveness depends on deal origination capacity and project preparation quality — the fund structure is sound but only as useful as the bankable projects it finances. Kenya's expanded CGT definitions may be broader than those in existing double-taxation agreements, creating potential characterisation disputes and double-taxation exposure for cross-border investors. Tighter KRA enforcement powers increase compliance risk for multinationals with complex Kenya structures. The import documentation requirements effective September 2026 add a new compliance layer for capital goods imports central to infrastructure construction timelines.
What Happens Next
NIF identifying and structuring its first portfolio of projects — JKIA expansion confirmed as an early candidate; SGR Phase 2B financing likely to be partially structured through the NIF; first five-year investment policy to be published by the Governing Council
Commercial Opportunity
Transaction advisors, project finance lawyers, infrastructure fund managers and institutional investors with appetite for Kenyan infrastructure assets now have a dedicated counterparty — the NIF — with a mandate to structure and co-invest alongside private capital. The 100% first-year deduction threshold creates a clear investment sizing incentive. The 51-project PPP pipeline provides immediate deal flow for advisors and sponsors.