NAIROBI, Kenya — President William Ruto has questioned why nearly half of Kenya’s Sh3.2 trillion pension savings is invested in government securities while only a small fraction finances roads, power plants and other infrastructure projects.
Speaking during the Africa We Build High-Level Roundtable in New York, President Ruto said 46 per cent of pension assets is held in government securities, compared with just 0.02 per cent invested in infrastructure debt.
“For every shilling that Kenyan pension funds have placed in infrastructure debt, they hold close to two thousand shillings of government paper,” Ruto said.
Kenyan regulations allow pension funds to invest up to 10 per cent of their assets in infrastructure. However, the President said the absence of suitable investment products had prevented fund managers from reaching that limit.
“The money is not being held back by prudence. There is almost nothing of that kind for her fund to buy,” he said.
Using the example of a teacher in Eldoret who has contributed to a pension scheme for 20 years, Ruto said her savings were more likely to be invested in foreign or domestic Treasury securities than in a geothermal plant near her community.
He said pension fund managers were responding to regulations and market incentives that present government securities as safer investments while treating infrastructure projects as risky.
“Her fund manager is not being unpatriotic. He is being rational. The rules he works under tell him the Treasury bill is prudent and the power plant is adventurous,” Ruto said.
The President called for the development of bankable projects, credit guarantees and local-currency investment instruments that pension schemes and insurance companies can purchase.
He cited Kenya’s first infrastructure fund listed on the Nairobi Securities Exchange in May, which raised Sh3.4 billion with support from the United Kingdom.
Ruto also said the National Infrastructure Fund, signed into law in March, was designed to mobilise up to $40 billion for roads, ports, power and water projects without increasing public debt.
Under the model, pension funds, sovereign investors and development finance institutions would acquire stakes in infrastructure assets and share in their returns instead of lending money to the government.
The President said Kenya was prepared to open its default and recovery data to rating agencies, insurers and financial regulators as part of efforts to review how African investment risk is assessed.
He proposed the establishment of a working group to examine the rules governing investment in African infrastructure and present findings at the next Africa We Build Summit within 12 months.
