Pension Funds Shift Focus to Infrastructure for Enhanced Returns
In Kenya, the government has been advocating for the Public-Private Partnership (PPP) model as a strategic approach to infrastructure development.
NSSF eyes investment in Nairobi-Nakuru-Mau Summit Highway to boost returns and support infrastructure growth. Photo/FSD Africa.
By Juliet Jerotich
The National Social Security Fund (NSSF) has announced its intention to invest in the 175-kilometre Nairobi-Nakuru-Mau Summit Highway, a key infrastructure project currently at the tendering phase.
This move exemplifies a growing trend among pension schemes, which are exploring alternative investment opportunities that promise higher returns than traditional options, while also fostering socio-economic progress—especially important given the increasing public debt challenges many countries face today.
At the recent International Social Security Association (ISSA) continental technical seminar held in Nairobi, experts highlighted the transformative impact infrastructure investments are having on pension fund portfolios across Africa.
With multilateral financiers tightening their lending criteria and making credit harder to secure, many African governments are finding it difficult to fund large-scale infrastructure projects. Pension schemes stepping into this space represent a viable solution to bridging this financing gap.
In Kenya, the government has been advocating for the Public-Private Partnership (PPP) model as a strategic approach to infrastructure development.
This model reduces the dependence on donor funding and alleviates the financial burden on taxpayers who would otherwise shoulder the costs of capital-heavy projects.
It is within this framework that the NSSF’s interest in the Nairobi-Nakuru-Mau Summit Highway has emerged as a strategic opportunity.
NSSF regards the toll road project as a secure investment avenue capable of generating substantial returns to support the financial well-being of pensioners.
David Koros, the Managing Trustee of NSSF, explained that this investment decision is the result of extensive benchmarking exercises comparing pension funds worldwide.
He pointed out that many public pension schemes are increasingly diversifying into sectors such as infrastructure, agriculture, and healthcare to boost portfolio performance.
Koros further revealed that NSSF aims to grow its assets from the current Ksh 500 billion to Ksh 1 trillion in the medium term, with infrastructure projects playing a vital role in achieving this target.
Besides investment diversification, Koros noted that NSSF is undertaking reforms to improve service delivery and operational efficiency. A key success has been the reduction in pension payment processing time—from an average of 76 days to just 10 days.
Efforts are ongoing to shorten this turnaround time further to only one day, underscoring the Fund’s commitment to timely and efficient service for its members.
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