While Treasury CS John Mbadi was busy selling the National Infrastructure Fund (NIF) as a “game-changer” to the Budget Committee on Monday, March 2, 2026, Auditor General Nancy Gathungu was busy highlighting the cracks in its foundation.
The NIF, a massive vehicle designed to mobilize Ksh 5 Trillion for flagship projects like the JKIA modernization and Thika Road dualing, is facing a “constitutional headwind” that could determine its survival.
The “Private Company” Controversy
One of the most striking revelations from today’s session—and recent court filings—is that the NIF is not a “fund” in the traditional constitutional sense.
The Structure: Mbadi admitted that the NIF is designed as a Private Limited Liability Company rather than a constitutional fund under Article 206.
The Rationale: The Treasury argues this structure allows it to operate with “commercial speed” and attract private capital without the “sluggishness” of government bureaucracy.
The Risk: Critics, including the Law Society of Kenya (LSK), argue this is a “deliberate strategy” to bypass the Controller of Budget’s mandate to authorize withdrawals.
Gathungu’s Warning: The Legal Fault Lines
Appearing before the same committee, the Auditor General raised three critical “red flags”:
Accountability Ambiguity: The Bill creates parallel lines of authority between a Board-appointed CEO and a Treasury-designated Fund Administrator. Who is ultimately responsible if billions go missing?
The Debt Paradox: While the fund is marketed as a way to “reduce reliance on public debt,” Gathungu noted that clauses within the Bill actually prioritize borrowing as a primary financing strategy.
Bypassing the Consolidated Fund: There are concerns that channeling proceeds from the privatization of state assets (like Safaricom shares or Kenya Pipeline) directly into the NIF conflicts with the Privatization Act, which requires such funds to go to the National Treasury’s Consolidated Fund first.
Mbadi’s Rebuttal: “We Need to Move Fast”
In a passionate defense, CS Mbadi urged lawmakers and the courts to view the NIF as an investment engine rather than a spending kitty.
“The entity was necessitated by an overriding public interest to provide timely, efficient, and cost-effective mechanisms for financing,” Mbadi stated in an affidavit.
He reassured the committee that 90% of proceeds from major asset sales would be “ring-fenced” within the NIF to ensure they aren’t used for salaries or debt repayment, but specifically for “commercially viable infrastructure.”
The NIF Dispute: Two Sides of the Coin
