Saturday, July 20, 2024

Kenya: Local Infrastructure Projects Seek Over Sh700bn Financing From Pension Industry

Nairobi — The Kenya Pension Funds Investment Consortium (KEPFIC) has received infrastructure and alternative investment proposals worth over Sh700 billion ($5.5 billion) from project sponsors and fund managers looking to raise capital from the local retirement benefits schemes.

The proposals come as local pension schemes expand their search for suitable investments to provide diversification and higher returns for pensioners.

The announcement was made during the opening of the two-day KEPFIC Annual Investment Conference in Nairobi today, where the shortlisted investment opportunities were presented to the local pension fund investors and discussed with project sponsors, fund managers, and industry experts.

The projects under evaluation by the pensions investors span different sectors such as energy, property, affordable housing, healthcare, water and sanitation, transport and logistics, agriculture, telecoms, and ICT among others.

The mobilization of funds for different sectors by KEPFIC aligns with the Kenyan government’s plan to mobilize over Sh100 billion in private sector capital through priority projects that deliver nationally significant infrastructure, drive growth and have the highest benefit to Kenyans as outlined in the 2023/24 National Budget Proposal.

“Kenyan pension schemes are in search of profitable, secure, and impactful investments for better returns for their members. Infrastructure and alternative assets are an attractive but untapped new asset class for pension schemes and offer attractive returns and much-needed portfolio diversification benefits, delivering better overall investment performance,” said Ngatia Kirungie, the Head of the KEPFIC Secretariat and CEO of Spearhead Africa, during the conference opening.

According to the Retirement Benefits Authority, the pension industry assets under management stand at approximately Sh1.5 trillion.

Pension funds are allowed to put up 10 percent of their assets into infrastructure as per the RBA investment guidelines passed in 2020.

Traditionally, pension funds have invested in government securities, listed equities, and direct property investments but infrastructure investments remain hugely untapped yet profitable and sustainable in the long term.

KEPFIC, founded as an industry-wide initiative supported by the Joint Capital Markets Program (J-CAP), a World Bank Group program, and USAID, works together with pension fund trustees, fund managers and regulators to address the challenges that pension schemes face while investing in alternative assets.