CS Mbadi rules out salary deductions to finance National Infrastructure Fund

Treasury Cabinet Secretary John Mbadi.

Treasury Cabinet Secretary John Mbadi has dismissed claims that public servants will face salary deductions to finance the National Infrastructure Fund (NIF).

Speaking on Tuesday while responding to concerns raised over the fund, Mbadi clarified that the government has no intention of deducting money from civil servants’ salaries to support the initiative. 

He said that the fund will instead be capitalized through the sale of government shares in state-owned enterprises.

“The answer is no. In fact, to the contrary, this fund is being set up from the seed capital generated from the divestiture of government shares in state-owned enterprises,” Mbadi said when asked whether public servants’ pay would be deducted to fund the NIF.

According to the Treasury CS, the government plans to partially offload its shares in several state-linked corporations to generate the initial capital required to operationalize the fund.

Mbadi identified Kenya Pipeline Company as one of the first institutions already considered in the divestiture plan. The government is also looking at its stake in Safaricom as part of the broader strategy to raise funds.

“We have several candidates. KPC is the first candidate; we also have Safaricom share divestiture and many others that will come,” Mbadi said.

The National Infrastructure Fund is expected to function as a sovereign-style investment vehicle through which the government can pool strategic assets and investments in order to stabilize the economy and support long-term national development.

The government says the fund will allow Kenya to better manage public investments, generate returns from state-owned assets, and reduce pressure on taxpayers by creating alternative revenue streams.

Mbadi noted that once operational, the fund could help the government reduce some of the tax burdens currently imposed on Kenyans.

“In fact, this fund is likely to lower taxes that are levied on Kenyans,” he said.

He added that the government has already made commitments to reduce certain taxes, including levies affecting individuals with little or no income. According to the CS, the upcoming Finance Bill will contain proposals aimed at implementing those tax reductions.

“We have already committed ourselves to reducing the tax on no-income earners, and we are going to actualise it with the Finance Bill,” Mbadi explained.

The Treasury boss emphasized that establishing the National Infrastructure Fund is part of a broader strategy to strengthen the country’s economic resilience.

By building a pool of strategic investments, the government hopes to cushion the economy from financial shocks and support sustainable fiscal management.

“We need this fund to help us stabilize the economy even after doing that,” Mbadi said.

The establishment of the National Infrastructure Fund has generated debate among policymakers and economists, particularly regarding how it will be structured and managed. However, the Treasury maintains that the initiative will not rely on direct contributions from workers but instead on strategic restructuring of government-owned assets.