Last week’s ceremony at State House had all the trappings of a historic moment. President William Ruto signed the Sovereign Wealth Fund Act, 2026 into law, flanked by the Deputy President, the Treasury Cabinet Secretary, the Speakers of both Houses and a parade of bank chief executives.
One of the ceremony’s most striking moments was the presence of schoolchildren in uniform, brought on stage to symbolise the Act’s promise that the new fund is intended to serve future generations.
Speaker after speaker invoked Norway’s sovereign wealth fund. Kenya, they declared, had finally embraced the Norwegian model—the global gold standard for turning oil and mineral wealth into a permanent national endowment instead of allowing it to finance a one-generation spending spree.
Where will the money come from? Kenya’s recent mineral mapping has identified significant deposits of rare earths and other critical minerals. The country has also learned the cost of extracting mineral wealth without a mechanism to preserve it.
The President himself cited titanium mining in Kwale as a cautionary tale of resources depleted with little lasting benefit to future generations.
The new law establishes three windows: a Future Generations Fund, christened “Urithi Fund,” which must receive at least 30 percent of petroleum and mineral revenues and cannot be pledged as collateral or borrowed against; a Stabilisation Fund to cushion the budget during economic shocks; and a Strategic Infrastructure Investment Fund to mobilise capital for roads, energy and other national priorities.
On paper, this is a sensible three-pillar structure. It places Kenya alongside countries such as Botswana, Timor-Leste and Chile that have sought to escape the resource curse by embedding fiscal discipline in law rather than relying on political goodwill.
Yet invoking Norway also invites an uncomfortable comparison. The defining feature of Norway’s model was never the size of its fund. It was the fiscal rule—and, more importantly, the institutional independence that protects it.
Norway’s Government Pension Fund Global is managed by Norges Bank Investment Management at arm’s length from the Finance Ministry under a mandate established in law and overseen by Parliament.
The government may spend only the fund’s expected long-term real return—a ceiling initially set at 4 percent in 2001 and reduced to 3 percent in 2017 after an independent review concluded the earlier limit was too generous.
That ceiling is not merely advisory. It cannot be waived simply because the budget is under pressure. Even during the Covid-19 pandemic, when withdrawals temporarily exceeded the benchmark, the breach became the subject of public scrutiny.
Norway’s fiscal experts responded by recommending a review of the rule rather than relaxing it. The lesson is not that the rule is never tested, but that when it is, independent institutions publicly defend it instead of yielding to the executive.
Measured against that standard, Kenya’s new law resembles less an independent sovereign wealth fund than a specialised government account.
The Treasury Cabinet Secretary sits on the governing board. Withdrawals from the Stabilisation and Strategic Infrastructure Funds are governed by the fiscal responsibility principles contained in the Public Finance Management Act—the very law administered by the Treasury itself.
The Central Bank will hold and operate the fund’s accounts, but there is no equivalent of Norway’s independent investment manager: an institution insulated from ministerial direction, accountable primarily to Parliament, publishing its own performance reports and resisting imprudent withdrawals.
That is not a technical distinction. It is the essence of a sovereign wealth fund. A pool of money that the Treasury can access, subject mainly to rules it also interprets, is not fundamentally different from any other government account. It simply carries a more prestigious label and has a larger governing board.
Norway’s reputation rests not on the existence of a sovereign wealth fund but on the fact that ministers cannot simply decide they need the money more than the rules permit.
If Kenya’s Sovereign Wealth Fund is to fulfil the promise implied by its name, Parliament should not consider its work complete.
Its next task should be to strengthen the law by guaranteeing genuine operational independence from the Treasury, establishing a professional investment manager insulated from political direction, and enacting a fiscal rule with real legal force—one capable of surviving the pressures of an election-year budget.
The writer is a former managing editor of The EastAfrican.