The International Monetary Fund (IMF) has called for enhanced legal frameworks to govern sovereign wealth funds (SWFs) as their global assets and investment roles expand significantly.

In a July 21, 2026 publication, the IMF reported that SWFs now manage assets exceeding Ksh2.07 quadrillion, a substantial rise from Ksh387 trillion in 2008. These funds have evolved beyond fiscal stabilisation, increasingly investing in infrastructure, technology, private equity, and real estate.

Kenya's Sovereign Wealth Fund Framework

Kenya recently enacted the Sovereign Wealth Fund Act, signed into law by President William Ruto on July 8, 2026. The legislation establishes a legal structure to manage revenues from natural resources such as petroleum and mining royalties, as well as government investments.

Interior Principal Secretary Raymond Omollo emphasized that the law fills a critical gap in resource wealth management, ensuring benefits for both current and future generations.

The fund comprises three components:

  • Stabilisation Component: cushions the economy from revenue volatility
  • Strategic Infrastructure Investment Component: finances national development projects
  • Future Generation (Urithi) Component: preserves wealth for future generations, receiving at least 10% of fund resources

All revenues are first held in an account at the Central Bank of Kenya before allocation. The law prohibits using the fund as collateral or for borrowing, restricting investments to approved financial instruments.

IMF Recommendations on Governance

The IMF stresses the importance of clear legal mandates to ensure accountability and guide investment decisions. Different countries tailor SWF models to their priorities, with commodity exporters often focusing on stabilisation funds, while wealthier nations prioritize long-term savings.

To improve governance and clarity, the IMF suggests separating distinct objectives through individual funds or ring-fenced sub-funds, citing Nigeria's Sovereign Investment Authority and Norway's Government Pension Fund Global as examples.

Robust governance should include legally defined powers, enforceable fiduciary duties, transparent reporting, and effective oversight. Operational independence must be supported by legal provisions on deposits, withdrawals, and accountability to legislatures and the public.

The IMF also highlights the Santiago Principles, established in 2008 with its support, as a foundational governance framework, noting that evolving investment strategies require stronger legal and governance measures to maintain fiscal discipline and public trust.