Sovereign wealth fund: Getting the basics right

This story has significance for readers across Kenya and beyond.

Kenya has just done something few countries get the chance to do. The Sovereign Wealth Fund Act, 2026 creates an institution with the potential to change how this country relates to its natural resource wealth for generations to come, converting what is dug from the ground today into an asset still serving Kenyans 100 years from now. That is worth taking seriously, and right.

In 2016, while undertaking postgraduate study at the University of Nairobi, I researched this question because it seemed one of the most consequential a country in Kenya's position could face. Kenya's fund existed only as a proposal then.

The research compared it against five countries that had already built such funds, and against the international governance standard known as the Santiago Principles, to understand what tends to make these institutions succeed or fail.

A decade later, with the law, it seems worth returning to that comparison — not to keep score, but because the questions it raised are exactly the ones Kenya now has to answer in practice.

The Act gets a great deal right. It keeps the fund's three purposes — cushioning shocks, financing infrastructure, and saving for future generations — legally distinct rather than blended into one account, since a shilling meant to survive 40 years cannot be managed the same way as one meant to be spent this year.

It gives the future generations, or Urithi, component real protection: it cannot be borrowed against. It routes all revenue through a central bank account before allocation, giving the institution best equipped to understand macroeconomic risk a genuine role from the outset.

And it ties infrastructure spending to the national development plan in language built to outlast any single blueprint — sensible, given how close Vision 2030 is to its own horizon.

Measured against the questions that research set out a decade ago, the Act gets well over 90 percent of the foundational architecture right. Two things are still worth Kenyans watching closely as implementation begins — not because they overshadow what has been achieved, but because they matter precisely when everything else has been done well.

The first is the Senate's absence. Kenya is a devolved country, and the 47 county governments the Senate represents have a direct stake in how national resource wealth is managed. Nothing in the Act gives the Senate a formal role in the Fund's oversight — not a small gap given devolution is a defining constitutional commitment.

The funds that endure tend to be the ones whose governance mirrors the country's political architecture: Norway's fund answers closely to a Parliament with strong constitutional authority, and Chile built specific safeguards into its fund to keep it stable through changes of government. A fund designed as though devolution does not exist is designed against the grain of Kenya's own Constitution.

The second is public participation. The Constitution treats this as a right, not a courtesy, and the international governance standard treats it as a core test of legitimacy.

The Act gives Parliament and the Auditor-General real oversight tools — quarterly reporting, audited statements, election-period safeguards — but no way for ordinary Kenyans, not just auditors and legislators, to follow where this wealth goes directly.

Singapore is a useful reference point, not for its returns but its habits of disclosure: its fund answers to parliament through regular public scrutiny, and engages citizens directly through open, modern communication rather than formal reporting alone. Kenya has no equivalent citizen-facing channel yet, and building one would cost little against what it would add to public trust.

A law that gets this much of a foundational question right, and leaves only a few genuinely important aspects still to be settled, is no mean achievement — it is a serious, largely well-built piece of legislation. But Kenya did not create this fund to produce a well-drafted Act.

It created it to build something still serving Kenyans, honestly and effectively, long after everyone reading this has left public life. That is the standard worth holding it to as implementation begins.

Peter Odhiambo Achar is an information development and strategy practitioner

Reporting originally appeared via Business Daily. Read the full source for additional context.