THE SOVEREIGN WEALTH FUND BILL, 2026

Background

The Sovereign Wealth Fund Bill, 2026 seeks to establish a Sovereign Wealth Fund in Kenya. Its primary objective is to create institutional arrangements for the effective administration and efficient management of revenues derived from minerals, petroleum, and other allocated sources. The Bill also includes consequential amendments to the Mining Act (Cap. 306), the Petroleum Act (Cap. 308), and the Kenya Revenue Authority Act (Cap. 469).

Key Amendments

• Establishment and Structure of the Fund: The Bill establishes the Sovereign Wealth Fund (Clause 4(1)) and structures it into three distinct components (Clause 4(3)):
  • The Stabilisation Component: To provide a buffer against fluctuations in resource revenues or extraordinary shocks (Clause 9).
  • The Strategic Infrastructure Investment Component: To finance strategic infrastructure priorities aligned with national development (Clause 12).
  • The Future Generations Component: To build a savings base for future generations, provide alternative income, and distribute wealth when mineral and petroleum resources are depleted (Clause 15).
• Revenue Management: All revenues from minerals, petroleum, and other sources are initially held in a "Holding Account" at the Central Bank of Kenya (Clause 7). Transfers from this account to the Fund's components are determined by the Cabinet Secretary in consultation with the Board, considering macroeconomic stability, non-resource sector competitiveness, strategic projects, and a minimum of 10% savings for future generations. Transfers must occur within ten days of receipt (Clause 8).
• Board of Management: A Sovereign Wealth Fund Board is established to manage and invest the Fund (Clause 25). The Board's composition includes a Chairperson appointed by the President, various Principal Secretaries (National Treasury, Mining, Petroleum), the CBK Governor, and four other non-public officers appointed by the Cabinet Secretary, along with a non-voting Chief Executive Officer (Clause 28). Board members and the CEO must meet specific qualification criteria (Clause 29, 35) and are subject to terms of office (Clause 30) and removal procedures (Clause 34, 36).
• Depletion Provisions: In the event of a "significant depletion" (defined as a 90% reduction in annual resource revenue for two years or a geological report indicating deposit reduction), the individual components of the Fund will be consolidated into a single account. Future withdrawals will then only be made from the earnings and dividends of the cumulative principal deposits and interest, for financing strategic infrastructure investments (Clause 18).
• Consequential Amendments:
  • Mining Act (Cap. 306): Section 186 is amended to ensure all fees, charges, and royalties are paid to a "Collector" (Commissioner-General of KRA) and then remitted to the Sovereign Wealth Fund. Specific royalties (under section 183(5)(b) and (c)) are remitted to the designated State Department account for mining (Fourth Schedule, Clause 1).
  • Petroleum Act (Cap. 308): Section 53 is amended to replace "National Government" with "Collector" for financial and fiscal obligations. Section 57 is amended to specify that profit petroleum shares, royalties, signature bonuses, and annual fees from upstream petroleum operations are paid to the "Collector" who then remits them to the Sovereign Wealth Fund (Fourth Schedule, Clause 2-3).
  • Kenya Revenue Authority Act (Cap. 469): The First Schedule is amended to include the Mining Act and Petroleum Act among the written laws relating to revenue (Fourth Schedule, Clause 4).

New Obligations

• Investment Restrictions: The Fund is explicitly prohibited from investing in speculative derivatives, unlisted real estate, private equity, art, or commodities (Clause 42). Crucially, assets of the Future Generations Component, Stabilisation Component, and Strategic Infrastructure Investment Component shall not be invested in securities issued by a Kenyan issuer, real estate located in Kenya, or funds/companies primarily investing in Kenya (Clause 43, 44, 45).
• Prohibition on Lending/Collateralisation: The Fund's components cannot be used to make advances or loans, provide credit, or act as collateral for any national government entity, state corporation, county government entity, or other legal/natural person (Clause 46).
• Investment Fund Managers: The Board must competitively recruit and appoint investment fund managers (Clause 49) who must meet specific technical qualifications, possess sufficient capital, strong risk management systems, a sound performance record, and be licensed by the relevant authority (Clause 49(3)). These managers have obligations to implement investment policies, ensure compliance, and provide annual reports (Clause 50).
• Financial Reporting and Audit: The Chief Executive Officer, as Administrator, must prepare quarterly and annual financial statements for audit by the Auditor-General (Clause 21). The Board must prepare annual consolidated financial statements within three months of the financial year end and submit annual reports for each component within six months (Clause 51, 53). These reports are published and submitted to the National Assembly.
• Pre-election Safeguards: Monies in the Fund must be certified by the Board three months before a general election, and a report submitted to relevant authorities. No withdrawals or transfers are permitted from the Fund during the three-month period preceding a general election (Clause 56).

Penalties

• Misappropriation of Funds: Any person who misappropriates funds or assets from the Fund, or assists in doing so, commits an offence. The penalty is a payment of twice the misappropriated amount and a fine of not less than KSh 10 million, or imprisonment for not less than five years, or both. The individual is also liable to make good the loss (Clause 54).
• General Penalty: For contravening any provision of the Act where no specific penalty is provided, the offender is liable to imprisonment for not less than two years, or a fine of not less than KSh 5 million, or both (Clause 55).
• Conflict of Interest: A Board member failing to disclose a material personal interest or attempting to exert undue influence commits an offence, liable to imprisonment for up to three years or a fine of up to KSh 1 million, or both (First Schedule, Clause 6(4)).

Transitional Provisions

• The Cabinet Secretary may appoint an interim manager and staff to administer the Fund until the Board is constituted (Clause 60(1)). Once the Board is constituted, it will assume the functions and recruit a Chief Executive Officer (Clause 60(4)).