The Sovereign Wealth Fund Bill, 2026

SPECIALISSUE

Kenya Gazette Supplement No. 25 (National Assembly Bills No.7)

REPUBLICOFKENYA

KENYA GAZETTE SUPPLEMENT

NATIONALASSEMBLYBILLS,2026

NAIROBI,25thFebruary,2026

CONTENT

| Bill for Introduction into the National Assembly- | PAGE | |-----------------------------------------------------|--------| | TheSovereignWealthFund Bill,2026 | 141 |

THESOVEREIGNWEALTHFUNDBILL,2026 ARRANGEMENT OFCLAUSES

Clause

PARTI-PRELIMINARY PROVISIONS

• 1-Short title.
• 2-Interpretation.
• 3-Guiding values and principles of the Act.

PARTII-THESOVEREIGN WEALTHFUND

• 4-Establishmentof the Fund.
• 5-Object and purpose of the Fund.
• 6-Sources of funds of the Fund.
• 7-Holding Account.
• 8-Transfers from the Holding Account.

The Stabilisation Component

• 9-Objects andpurpose of the Stabilisation Component.
• 10-Sources of fundsof theStabilisation Component.
• 11-Withdrawals from the Stabilisation Component.

The Strategic Infrastructure Invesiment Component

• 12-Object and purpose of the Strategic Infrastructure Investrnent Component.
• 13-Sources of fundsof the Strategic Infrastructure Investment Component.
• 14-Withdrawals from the Strategic Infrastructure Investment Compomet

The Future Generations Component

• 15-Object and purpose of the Future Generations
• Component.
• 16-Sources of funds of the Future Generations Component.
• 17-Transfers from the Future Generations Component Depletion of Minerai and Petroleum Resources
• 18-Depletion ofresources.

PARTIII-PUBLICFINANCE MANAGEMENT

PRINCIPLES

• 19-Application of Cap. 412A.
• 20-Enforcement of fiscal responsibility principles.
• 21—Administrator of the Fund and financial reporting.
• 22-Preparation of estimates and Budget.
• 23-Cash management.
• 24-National government budget process.

PART IV-THE MANAGEMENT OF THE FUND

• 25-Establishment of the Board.
• 26-Headquarters of the Board.
• 27-Powers and functions of the Board.
• 28-Composition of the Board.
• 29-Qualifications of members of the Board.
• 30-Terms of office.
• 31-Remuneration of the Board.
• 32-Meetings of the Board.
• 33-Committees of the Board.
• 34-Resignation,removal and vacancy in office.
• 35-Chief Executive Officer.
• 36-Vacation of office of the Chief Executive Officer.
• 37-Staff of the Board.
• 38-Code of conduct.
• 39-Protection from personal liability.
• 40-Confidentiality.
• 41-Common seal.

PARTV-INVESTMENT OFTHE FUND

Prohibited Instruments

• 42-Prohibited instruments

Qualifying instruments

• 43-Qualifying instruments of the Future Generations Component.

• 44-Qualifying instruments of the Stabilisation Component.
• 45-Qualifying instruments of the Strategic Infrastructure Investment Component.
• 46—Prohibition of advances,credits and
• collateralization of the components of the Fund.

Investment Principles and Rules

• 47-Risk management principles.
• 48-Investment rules.

PART VI-INVESTMENT FUND MANAGERS

• 49-Appointment of investment fund managers.
• 50-Functions of investment fund managers.

PART VII-FINANCIAL PROVISIONS

• 51-Annual financial statements.
• 52-Audit of the Fund.
• 53-Annual report of the Fund.

PART VIII-MISCELLANEOUS PROVISIONS

• 54-Misappropriation of funds.
• 55-General penalty.
• 56-Preservation of the reserves of the Fund.
• 57-Exemption of Cap.446
• 58—Act to prevail.
• 59-Regulations.
• 60-Transitional provision.
• 61-Consequential Amendments.

SCHEDULES

First Schedule- Conduct of the business and

affairs of the Board.

Second Schedule-Qualifying instruments.

Third Schedule-Guidelines to service level agreements for an investment fund manager.

Fourth Schedule-Consequential amendments.

THESOVEREIGNWEALTHFUND BILL,2026

ENACTED by the Parliament of Kenya,as

• A BILL for an Act of Parliament to establish the Sovereign Wealth Fund; to provide institutional arrangements for the effective administration and efficient management of minerals revenues, petroleum revenues and monies from other sources allocated to the Fund; and for connected purposes

follows-

PARTI-PRELIMINARY PROVISIONS

• 1.This Act may be cited as the Sovereign Wealth Fund Act,2026.
• 2.In this Act unless the context otherwise requires-—

"Board" means the Sovereign Wealth Fund Board appointed under section 25;

"Cabinet Secretary"means the Cabinet Secretary for

"Chief Executive Officer"means the Chief Executive

the time being responsible for matters relating to finance;

Officer of the Fund appointed under section 35;

Component, Strategic Infrastructure Investment Component or Future Generations Component;

"component of the Fund" means the Stabilisation

"Consolidated Fund" has the same meaning assigned

"cost petroleum" means the cost of exploration, development and production which are recoverable by the

to it under Article 206 of the Constitution;

contractor under the Petroleum Act;

"extraordinary shocks"means events beyond the control of the national government,which have significant negative impact on the economy including terms-of-trade shocks,natural disasters,shocks due to demand for exports, or conflict or crisis in neighbouring countries that has

"financial instruments"means contracts that give rise to financial assets of one entity and a financial liability or equity instrument of another entity;

adverse effects on balance of payments;

• Short title.

Interpretation.

"financial year" means the period of twelve month

starting from first July and ending on thirtieth June;

"Fund"means the Sovereign Wealth Fund established under section 4;

"Holding Account" means a bank account for revenues from minerals and

receiving and holding petroleum before the revenues are transferred to the components of the Fund;

section 51 of this Act.;

"Investment Policy"means a public statement on the principles that will apply to the desired risk profile,the allocation and list of assets, portfolios,benchmarks and other issuesrelated with the general investmentpolicy;

"medium and large-scale mining operations"has the

same meaning assigned to it under the Mining Act;

"mineralhas the meaning assigned to it under the Mining Act;

"participating interest"has the meaning assigned to it

under the Petroleum Act;

"petroleum"has the meaning assigned to it under the

Petroleum Act,2019;

"profit petroleum"means the predetermined allocation of petroleum production after 'cost petroleum',split between the contractor and the government;

"publicise" has the meaning assigned to it in the Public Finance Management Act;

"publish" has the meaning assigned to it in the Public Finance Management Act;

"qualifying instrument"means an instrument specified in the Second Schedule;

"resource revenue"means the Government's revenue as specified in section 6;

"significant depletion"means ninety per cent reduction in-

• (a) annualresource revenue belowthe highest recorded annual receipt of monies into the Holding Account;and

Cap.306.

Cap.308.

• (b) mineral and petroleum deposits:

Provided that-

• (i) the reduction in resource revenues shall have
• been persistent for two years; and
• (ii) the reduction in mineral and petroleum deposits shall be based on a geological report prepared by a geologistregistered in accordancewith the
• Geologists Registration Act; and

"windfall" means unexpected resource revenues more

than ten per cent of the forecasted amount under the budget estimates within a financial year.

• 3.(1) Every public officer and each person to whom this Act applies shall be guided by the principles and values as provided for in the Constitution and the relevant Acts of Parliament in discharging the functions under this Act.
• (2) Despite the generality of subsection (l),a public officer or such other person to whom this Act applies shall, in particular, be guided by the following values and
• principles of the Constitution-
• (a) the national values and principles of governance
• under Article 10;
• (b) equality and freedom from discrimination under Article 27;
• (c) the responsibilities of leadership under Article 73;
• (d) the principles governing the conduct of state and public officers under Article 75;
• (e) the principles of public finance under Article 201;
• and
• (f) the values and principles of public service under
• Article 232.

PARTII-THESOVEREIGN WEALTH FUND

4. (1) There is hereby established a fund to be known 2. as the Sovereign Wealth Fund.

• (2) The Fund shall be managed and invested for the

4. benefit of current and future generations of the citizens of Kenya.

Guiding values and principles of the Act.

Establishment of theFund.

Cap.535.

• (3) The Fund shall comprise the following distinct

2. components- 3. (a) the Stabilisation Component; 4. (b)the Investment 5. Strategic Infrastructure Component; and 6. (c) the Future Generations Component.

• (4) An account for each of the components of the Fund shall be opened and maintained at the Central Bank of Kenya.

8. 5.(1) The objective of the Fund is to achieve longterm fiscal sustainability and intergenerational wealth- 9. sharing.

• (2) The purpose of the Fund shall be to-

11. (a) provide the national government with a buffer revenuesor 12. fromfluctuationsin resource extraordinary shocks; 13. (b) providefinance forstrategic infrastructure investment priorities to foster strong and inclusive growth and development;and 14. (c) build a savings base for future generations when minerals and petroleum resources are exhausted. 15. 6.(l) The Fund shall consist of the following 16. resource revenues- 17. (a) the Government's share of profit derived from upstream petroleum operations excluding the share ofprofit payable under section 58(2) and (3) of the Petroleum Act; 18. (b) all petroleum royalties payable to the Government; 19. (c) all mining royalties payable to the national 20. government under section 183(5)(a) of the Mining Act; 21. (d) all bonus payments on grants or when production levels or prices of petroleum operations reaches a defined level; 22. (e) all payments on grants or assignment of a mining rights;

Objective and purpose of the Fund.

Sources of funds of the Fund.

Cap.308.

Cap.306.

• (f) all earnings from direct or indirect participation
• interest of the Government in minerals and petroleum operations;
• (g) all proceeds from divestment from petroleum and mining interests held by the Government; and
• by the Cabinet Secretary and approved by Cabinet.
• (h) any other revenue from minerals,petroleum and monies from other sources as may be determined
• (2) The Cabinet Secretary shall publish in the Gazette
• the revenue sources determined and approved under subsection (1) (h).

7. (1) There shall be an account opened and operated

• at the Central Bank of Kenya for the Fund to be known as the Holding Account.
• (2) The Holding Account shall-
• (a) be used for receiving, holding and disbursing all the proceeds to the Fund; and
• (b) maintain the monies in Kenya shillings or a foreign currency as the Cabinet Secretary may, in consultation with the Central Bank of Kenya, determine.
• 8.(1) Any deposits into the Holding Account shall be transferred into the respective components of the Fund in proportions specifiedbythe Cabinet Secretaryin consultation with the Board at the beginning of each financial year considering conditions specified under section 5(2).
• (2) The transfer of deposits under subsection (1) shall
• be within ten days from the date of receipt.
• (3) In specifying the proportions under subsection (1), the Cabinet Secretary shall consider-
• (a) the need to maintain macro-economic stability;
• (c) investments in strategic priority projects; and
• (b) the competitiveness of the non-resource sector
• (d) the need to provide at least ten per cent savings for
• future generations;

Holding Account.

Transfersfrom the Holding Account.

• (4) The Cabinet Secretary shall, in preparing the national budget that incorporates monies from the Fund, balance over the medium-term does not exceed the threshold as may be set in regulations.

The Stabilisation Component

9. The object and purpose of the Stabilisation Component shall be to provide the national government with resources for management of extraordinary shocks which may affect macro-economic stability. 2. 10.The sources of funds of the Stabilisation Component are- 3. (a) transfers received from the Holding Account;and 4. (b) fifty per cent of the investment income earned from the Stabilisation Component. 5. 11.(1) The Cabinet Secretary shall, in respect of any withdrawals for purposes of the stabilization fund,write to the Board indicating the amount required and the justification for the withdrawal.

• (2) The Board shalll write to the Central Bank of Kenya to transfer the funds from the Stabilisation Component to the Consolidated Fund.
• (3) A withdrawal shall be approved by Cabinet and submitted to the National Assembly for appropriation under a Supplementary Budget.

8. (4) Any balance standing to the credit of the Stabilisation Component after withdrawal from the Stabilisation Component may be invested in a qualifying instrument in accordance with this Act.

• (5) An investment under subsection (4) shall be done in a manner that is not prejudicial to the objectives of the

10. Fund. 11. (6) A transfer under subsection (4) shall require a Board resolution and written instructions from the Board to the Central Bank of Kenya authorising the transfer of funds from tihne Stabilisation Component for investment purposes.

• (7) Transfers to the Stabilisation Component shall

13. cease when the component grows to ten billion shillings or

Object and purpose of the Stabilisation Component.

Sources of funds ofthe Stabilisation Component.

Withdrawalsfrom

the Stabilisation Component.

such ampunt as may be prescribed by the Cabinet Secretary,and any amount above that amount shall with the approval of the Cabinet and the National Assembly,be utilised to service thepublic debt.

The Strategic Infrastructure Investment Component

• (2) The strategic infrastructure investment priorities referred to under subsection (1) may include investments in agriculture, transport,housing,energy,water,education and health projects and may leverage private sector

2. 12.(1) The object and purpose of the Strategic Infrastructure Investment Component is to provide funding for strategic infrastructure investment priorities that are aligned to the national development plan. 3. finances in commercially viable projects. 4. 13.The sources of funds of the Strategic Infrastructure Investment Component are- 5. (a) transfers received from the Holding Account;and 6. 14.(1)Eachwithdrawalfrom 7. (b) fifty per cent of investment income earned on the Strategic Infrastructure Investment Component. 8. Infrastructure Investment Component shallthe Strategic 9. (a) only be made on the balance outstanding to the credit of the Stabilisation Component at the beginning of the financial year or most recent outstanding credit balance during the financial year;and 10. (b) beused tofinancestrategicinfrastructure

• (2) After approval of the budget by the National Assembly,the Cabinet Secretary shall write to the Board stating the amountrequired to bewithdrawn and the time of the withdrawal.

12. investment priorities as provided in the approved Budget Estimates and an appropriation Act. 13. (3) The Board shall,upon receipt of a request under subsection (2),write to the Central Bank of Kenya authorising the transfer of the funds from the Strategic

Object and purpose of the Strategic Infrastructure Investment Component.

Sourcesof funds of the Strategic Infrastructure Investment Component.

Withdrawalfrom the Strategic Infrastructure Investment Component.

Infrastructure Investment Component to the Consolidated

Fund.

• (4) Any outstanding balance after withdrawal from the Strategic Infrastructure Investment Component may be invested by the Board in a qualifying instrument in accordance with this Act.

2. (5)A transfer under subsection (3) shall require Board resolution and written instructions from the Board to the Central Bank of Kenya to authorise the transfer of funds from the Strategic Infrastructure Investment Component.

The Future Generations Component

• 15.The object and purpose of the Future Generations Component is to build a savings base for future generations
• by-
• (a) establishing an endowment to support Strategic Infrastructure Investment for future generations, when the revenues from minerals and petroleum are depleted;
• (b) generating an alternative stream of income to support expenditure on capital projects because of revenue downturn caused by depletion of minerals and petroleum revenues;and
• (c) distributing wealth across generations.
• 16.The sources of funds of the Future Generations Component are-
• (a) transfers received
• from theHolding Account;
• b) investment income earned on the Future Generations Component;
• (C) fifty per cent of the investment income earned on the Stabilisation Component,and
• fifty per cent of the investment income earned on theStrategicInfrastructure
• (d) Investment Component.

Object and purpose of the Future Generations Component.

Sources of funds

of the Future Generations Component.

• 17.(1) The Future Generations Component shall be invested in accordance with the provisions of Part V of this Act.
• (2)Any transfer from the Future Generations Component shall be authorised by a Board resolution and written instructions by the Board to the Central Bank of Kenya to transfer funds from the Future Generations Component for investment in terms of subsection (1).
• (3)Any transfer from the Future Generations Component shall not exceed the limit approved by the Board in its resolution under subsection (2).
• (4) Funds shall not be withdrawn or transferred from the Future Generations Component for any purpose except for investment in terms of subsection (1).

Depletion of Mineral and Petroleum Resources

18. (1) Where there is a significant depletion of large and medium-sized mineral operations and petroleum resources- 2. (a) the cash balances held in the respective components of the Fund shall be consolidated into one single account of the Fund to be held at the Central Bank of Kenya after which the different components of the Fund shall cease to exist; and 3. (b) all the net assets of the three components shall 4. become the assets of the Fund.

• (2) After the minerals and petroleum reserves are depleted,any withdrawal from the Fund shall be based on cumulative principal deposits and interests earned up to the date of declaration of depletion of resources, and only earnings and dividends from this base shall be withdrawn.
• (3) A withdrawal under subsection (2) shall be for the purposes of financing strategic infrastructure investment

7. Budget Estimates.

• (4) The Cabinet Secretary may prescribe regulations

9. for the management of the Fund under this section.

Transfers from the Future Generations Component.

Depletion of resources.

PARTIII-PUBLICFINANCE MANAGMENT PRINCIPLES

• 19.The Public Finance Management Act shall apply to the administration and management of the Fund.
• 20.Any withdrawal from the Stabilisation Component and Strategic Infrastructure Investment Component shall be made in accordance with the fiscal responsibility principles prescribed in section 15(2) of the Public Finance Management Act and the procedures prescribed in this Act.

21. (1) For the purposes of section 24(5) of the Public Finance Management Act, the Chief Executive Officer shall be the administrator of the Fund.

• (2)The administrator shall-
• (a) prepare quarterly financial statements in respect of the Fund in accordance with the Public Finance Management Act;and
• (b) prepare and submit to the Auditor-General for audit the annual financial statements of the Fund in accordance with the Public Finance Management Act and Public Audit Act.

22. (1) For the purposes of section 25(1) of the Public Finance Management Act, the Chief Executive Officer shall submit to the Cabinet Secretary for inclusion in the annual Budget Policy Statement-

• (a) the actual and projected resource revenues and withdrawals from the Fund over themedium-term;
• and
• (b) ceilings on annual withdrawals from the Stabilisation Component and Strategic Infrastructure Investment Component.
• (2) For purposes of section 26(1) of the Public Finance Management Act,the Chief Executive Officer shall submit to the Cabinet Secretary for inclusion in the Budget Review and Outlook Paper-—
• (a) the actual amount of withdrawals from the Stabilisation Component and Strategic Infrastructure Investment Component during the immediately preceding financial year in comparison with the approved budget estimates; and

Application of

Cap.412A.

Responsibility

Fiscal Principles.

Cap.412A.

Administrator of the Fund and financial reporting. Cap.412A.

Cap.412A.

Cap.412A. Cap.412B.

Preparation of estimates and budget. Cap.412A.

• (b) updated forecasts of resource revenues for the
• current financial year and the medium-term and explanations of the changes from the forecasts in the Budget Policy Statement of the immediately preceding financial year.
• 23.(1) The Holding Account and the accounts of the respective components of the Fund shall be subject to the same requirements as are applicable to the bank accounts ofnational government entities under section 28(1) of the
• Public Finance Management Act.
• (2) The Board shall,for the purposes of investment and management of the Fund,open bank accounts with banks regulated by the Central Bank of Kenya under the Banking Act upon approval by the Cabinet Secretary.
• (3) The Board shall prepare an annual cash plan and forecast of the Holding Account and components of the Fund in accordance with section 29(2) of the Public Finance Management Act.
• (4) The Board shall submit the annual cash plan and forecast prepared under subsection (3) to the Cabinet Secretary for approval and after approval,the Board shall submit a copy thereof to the Central Bank of Kenya.
• (5) In applying to the Holding Account the framework for cash management established under section 29(1) of the Public Finance Management Act, the Board shall update, on a rolling basis,a cash plan and forecast of the Holding Account and components of the Fund.
• (6) The Board shall,whenever it updates a cash plan and forecast under subsection (3),and at least once in every month,submit the updated cash plan and forecast to the Cabinet Secretary for approval where there are proposed changes and upon approval, transmit a copy to the Central
• Bank of Kenya.

Cash

management.

Cap.412A.

Cap.488.

• 24.(1) The circular on the budget process issued by the Cabinet Secretary under section 36(2) of the Public Finance Management Act shall,in addition to the contents mentioned in that section,include instructions in respect of proposals for projects to be financed by withdrawals from the Strategic Infrastructure Investment Component of the
• Fund.
• (2) The budget estimates mentioned in section 38(1)(b) of the Public Finance Management Act shall include,in addition to the contents mentioned in that
• section-
• (a) the estimated resource revenues payable to the Fund;and
• (b) the estimated expenditure to be funded from
• transfers from theStrategic Infrastructure Investment Component to the Consolidated Fund.
• (3) The budget documents mentioned in section 38(1) of the Public Finance Management Act shall include,in addition to the contents mentioned in that section-
• (a) the recent annual report and quarterly financial statements of the Fund;and
• (b) a statement of projects financed from the Fund which include-
• i) a description of policy objectives relating to prioritization of projects to be financed through development estimates of expenditure and investment;and
• (ii) a list of all investment projects which are ongoing or newly included in the budget estimates.

PARTIV-MANAGEMENT OF THE FUND

• 25.(1) There is established a Board to be known as the Sovereign Wealth Fund Board.
• (2) The management of the Fund shall vest in the
• Board.
• (3) The Board shall be a body corporate with perpetual succession and a common seal and shall,in its corporate name,be capable of-
• (a) suing and being sued;

National government budget process. Cap.412A.

Establishment of the Board.

• (b) taking,purchasing or otherwise acquiring,holding charging and or disposing of movable and immovable property in and outside Kenya;
• (c) entering into contracts;
• (d) performing or doing such other acts necessary under this Act which may lawfully be done by a body corporate.
• (4) The Board shall-
• (a) be the custodian of assets, properties and equipment of the Fund;and
• (b) manage, control and administer the assets of the Fund.
• 26.The Headquarters of the Fund shall be in Nairobi.
• 27.(1) The Board shall have powers necessary for the proper performance of its functions under this Act.
• (2) Despite the generality of subsection (1), the Board shall-
• (a) provide overall guidance and oversight of the administration and management of the Fund;
• (b) with the approval of the Cabinet Secretary, determine the management structure and operational guidelines of the Fund;
• (c) invest the proceeds of the Fund in accordance with
• this Act;
• (d) develop the investment policies of the Fund, considering monetary and fiscal policies of the Government,for approval by the Cabinet;
• (e) set performance benchmarks for returns and risks;
• f approvethe budgetfor the management, administration and agency fees related to the Fund, which shall be included in the budget estimates of the national government;
• (g)performfinancial 1management and reporting
• functions including-
• (i) causing to be prepared bank reconciliation
• statements every month;

Headquarters of the Fund. Powers and functions of the Board.

• ii) causing to be kept proper books of accounts and other books and records in relation to the Fund, of all activities and undertakings financed from the Fund;
• (ili) preparing and submitting reports required under the Public Finance Management Act and regulations made thereunder;
• (iv) monitoring and evaluating performance of the components of the Fund as specified in this Act;
• of the V) monitoring the performance investments,how the investment policy has been implemented, including which qualifying instruments in which the components of the Fund are invested;and
• (vi) preparing quarterly reports on the receipts into and withdrawals from the Fund and submit to the Cabinet Secretary by fifteenth day of the month following the end of the quarter as required under this Act and the Public Finance Management Act;
• (h) with the approval of the Cabinet Secretary, open or close bank accounts for the Fund;
• (i) recruit staff in line with established public service guidelines;
• (j)perform any other functions as may be assigned to it by the Cabinet Secretary:and
• (k) perform any other function necessary to achieve the objectives of the Fund under this Act.
• (3) The Board shall. in the exercise of its powers and performance of its functiors under this Act-
• (a) be responsible and accountable in the performance of its functions and exercise of its powers and for the proper management of the Fund;
• (b) keep under constant review the performance of the Chief Executive Officer in discharging the responsibilities of that office; and
• constant review the use of the
• (c)keep under resources of the Fund.

Cap.412A.

• (4) The Board may delegate to the Chief Executive Officer the exercise of any of its powers or the performance of any of its functions under this Act.

2. (5)Despite subsection (4),the Board shall remain ultimately responsible of the delegated powers and 3. functions. 4. 28.(1) The Board shall consist of- 5. (a) a Chairperson appointed by the President; 6. a representative appointed by the Principal Secretary in writing; 7. (b) the Principal Secretary to the National Treasury or 8. (c) the Principal Secretary responsible for mining or a 9. representative appointed by the Principal Secretary in writing; 10. (d) the Principal Secretary responsible for petroleum or a representative appointed by the Principal Secretary in writing; 11. (e) the Governor of the Central Bank of Kenya or a representative appointed by the Governor in writing; 12. (f) four other persons, not being public officers, 13. appointed by the Cabinet Secretary through a competitive;and 14. (g) the Chief Executive Officer who shall be an ex officio member with no right to vote at the meetings of the Board.

• (2) The Cabinet Secretary shall,in appointing members

16. (a) not more than two-thirds of the appointees are of the same gender; and 17. of the Board under subsection (1)(f),ensure that- 18. (b) the appointments reflect the regional and ethnic 19. diversity of Kenya. 20. (3) The appointment of the Chairperson and the members of the Board under subsection (1)(a) and (f) shall be by notice in the Gazette. 21. (4) The Board may co-opt not more than two other members who have necessary expertise to assist the Board in dispensing with any matter.

Composition of the Board.

• 29.(1) A person is qualified to be appointed as the
• Chairperson or a member of the Board under section 28(1) (a) and (f),if that person-
• (a) is a citizen of Kenya;
• (b) has over ten years experience at a senior level in
• the public or private sector;
• (c)holds a degree in economics,finance,accounting, law, banking or other relevant field from a
• university recognised in Kenya;
• (d)meets the requirements of Chapter Six of the
• Constitution;and
• (e) has not been convicted by a court of competent jurisdiction of any criminal offence with a fine exceeding five hundred thousand shillings or a jail term exceeding six months.
• (2) A person is not qualified to be appointed as the Chairperson or a member of the Board under section 28(1)(a) and (f) if that person-
• (a) is a member of Parliament or a County Assembly;
• (b) is a member of the governing body of a political party;or
• (c) is an undischarged bankrupt.
• 30.(1) The Chairperson and members of the Board appointed under section 28(1)(a) and (f) shall hold office for a term of three years and shall be eligible for reappointment for one further and final term of three years.
• (2) The appointment of the members of the Board shall under section 28(1)(a) and (f) be done in such a manner as to ensure that the terms of the members appointed do not lapse at the same time.
• 31.The Chairperson and the members of the Board shall be paid such allowances and any other benefits as the Cabinet Secretary may,on the advice of the Salaries and Remuneration Commission,determine.
• 32.(1) The procedure for the conduct of business and affairs of the Board shall be as set out in the First Schedule.
• (2) Despite subsection (1), the Board may regulate its ownprocedure.

Qualifications of members of the Board.

Term of office.

Remuneration of the members of the Board.

Meetings of the

Board.

33. (1) The Board may constitute not more than four 2. committees from among its members for the performance of its functions under this Act.

• (2) The Board may prescribe the duties and responsibilities sof each committee constituted under subsection (1).
• (3) The Board may establish an ad hoc committee to

5. handle any special business. 6. 34.The Chairperson and any other member of the Board,other than an ex officio member,may- 7. (a) at any time, resign from office by notice in writing to the appointing authority; or 8. (b) be removed from office if the Chairperson or member- 9. (i) has been absent from three consecutive meetings 10. of the Board without good cause; 11. (ii) is adjudged bankrupt or enters into a composition or scheme of arrangement with his or her creditors; 12. fraud; 13. (ii) is convicted of an offence involving dishonesty or 14. (iv)is convicted of a criminal offence and sentenced to 15. imprisonment for a term exceeding six months;or 16. (v) is incapacitated by prolonged physical or mental illness. 17. 35.(1) There shall be a Chief Executive Officer of the Fund who shall be competitively recruited by the Board.

• (2) A person shall qualify to be appointed as the Chief Executive Officer if that person-

19. (a) holds at least a bachelors' degree from a university recognised in Kenya; 20. (b) holds a master's degree in business administration or management, economics, finance,banking,or any other relevant field from auniversity 21. recognised in Kenya; 22. (c) has at least ten years'experience in senior-level 23. management in the public or private sector; and 24. (d) meets the requirements of Chapter Six of the Constitution of Kenya.

Committees of the Board.

Resignation, removal and vacancy in office.

Chief Executive Officer.

• (3) The Chief Executive Officer shall-

2. (a) hold office for a period of four years and shall be eligible for re-appointment for one further final term of four years, subject to satisfactory performance;and 3. (b) serve on such terms and conditions of service as the Board may,in consultation with the Cabinet Secretary and the Salaries and Remuneration Commission,determine.

• (4) The Chief Executive Officer shall, subject to the directions of the Board, be responsible for the day-to-day management of the affairs of the Board.

5. 36.The Chief Executive Officer may- 6. (a) at any time resign from office by notice in writing 7. to the Board;or 8. (b) be removed from office by the Board if the Chief Executive Officer- 9. (i) contravenes the provisions of the Constitution or any other law relating to public finance; or 10. (ii) is adjudged bankrupt or enters into a 11. composition or scheme of arrangement with his or her creditors; 12. an offence involving 13. (iii) isconvictedof dishonesty or fraud; 14. (iv) isconvicted of acriminal offence and sentenced to imprisonment toa term exceeding six months; 15. V is incapacitated by prolonged physical or mental illness for a period exceeding six 16. months; 17. gross misconduct; or 18. (vi) 19. (vii) incompetence. 20. 37.(l) The Board may recruit such staff as may be required for the performance of itsfunctions under this Act.

Vacation ofoffice of the Chief

Executive Officer.

• Staff of the Board.

• (2) The staff recruited under subsection (l) shall serve on such terms and conditions as the Board may,in consultation with Salaries and Remuneration Commission,

2. determine. 3. 38.The members of the Board, the Chief Executive Officer and staff of the Board shall adhere to the code of conduct governing public officers. 4. 39.(1) No matter or thing done or omission by any member of the Board or by anymember of staff or agent of the Board shall,if the matter,thing or omission was done in good faith for the purposes of performing the functions of the Board under this Act,render the person liable for any 5. action,claim or demand. 6. person mentioned in subsection (l) in defending an action, claim or demand in any suit brought against that person in respect of any matter or thing or omission done or purported to be done by that person under this Act, or on the direction of the Board,shall be reimbursed or borne by the Board unless the matter,thing or omission was done in bad faith. 40. (1) A person shall protect the confidentiality of information and documents that comes into his or her possession because of the exercise eofpowersor performance of functions under this Act.

• (2) Despite subsection (1),a person may disclose a documentorinformation to-

9. (a) an authorised officer for the purposes of carrying out any function under this Act; 10. (b) a court of competent jurisdiction to the extent necessary for the purposes of proceedings relating 11. to this Act; 12. (c) the Auditor-General for the performance of the Auditor-General's official duties; 13. (d) an authority 14. responsiblefor investigating corruption and matters related to integrity of public officers;and 15. (e) any other institution of the Government in the 16. performance of the duties of that institution.

Code of conduct.

Protectionfrom personal liability

Confidentiality

• (3) A person who contravenes subsection (1) commits an offence and is liable,on conviction,to a fine not exceeding five million shillings or to imprisonment for a period not exceeding two years.

2. 41.(1) The common seal of the Board shall be kept in 3. the custody of the Board and shall not be used except on the order of theBoard.

• (2) The affixing of the common seal shall be authenticated by the signature of any two Board members

5. or oneBoard member and the Chief Executive Officer. 6. (3) Any document not required by law to be made under seal and all decisions of the Board may be authenticated by the signature of the Chairperson or the 7. Chief Executive Officer.

• (4) The common seal of the Board,when affixed on a

9. document and duly authenticated,shall be judicially and officially noticed unless the contrary is proved,and any necessary order or authorisation by the Board shall be presumed to have been duly given.

PARTV-INVESTMENT OF THE FUND

Prohibited Instruments

• 42.The Fund shall not be invested in speculative derivatives,unlisted real estate,private equity,art or commodities or any other instrument as may be prescribed by the Cabinet Secretary by notice in the Gazette.

Qualifying Instruments

• 43.(l) The resources of the Future Generations
• Component shall be invested in qualifying instruments as specified inparagraph 1 of the Second Schedule.
• (2) The assets of the Future Generations Component
• shall not be invested in-
• (a) securities issued by a Kenyan issuer,real estate located in Kenya,or funds or companies or similar arrangements,the primary purpose of which are to
• invest in Kenya;or
• (b) covered bonds secured with assets mentioned under paragraph (a).
• 44.(l) The resources of the Stabilisation Component paragraph 2 of the Second Schedule.

Common seal.

Prohibited

instruments

instruments of the Future Generations

Qualifying Component.

Qualifying Stabilisation

instruments of the Component.

• (2) The assets of the Stabilisation Component shall not be invested in-

2. (a) securities issued by a Kenyan issuer,real estate 3. located in Kenya,or funds or companies or similar arrangements, the primary purpose of which are to invest in Kenya;or 4. (b) covered bonds secured with assets mentioned 5. under paragraph (a). 6. 45.(1) The resources of the Strategic Infrastructure 7. Investment Component shall be invested in qualifying instruments as specified in paragraph 3 of the Second Schedule. 8. assets of the StrategicInfrastructure 9. (2)The Investment Component shall not be invested in- 10. (a) securities issued by a Kenyan issuer,real estate 11. located in Kenya,or funds or companies or similar arrangements, the primary purpose of which are to invest in Kenya;or 12. (b) covered bonds secured with assets mentioned 13. under paragraph (a). 14. 46.The Future Generations Component, the Stabilisation Component and the Strategic Infrastructure Investment Component shall not be used- 15. (a) to make advances or loans or provide any other 16. form of credit to a national government entity, state corporation, county government entity, county corporation or any other legal or natural person; or 17. (b) as collateral for any borrowing of a national 18. government entity, state corporation,county government entity, county corporation or any other legal ornatural person.

Investments principles and rules

• 47.(1) The investment policies of the Fund shall be guided by the following risk management principles-
• (a) clear and consistent investment policies including
• objectives, risk tolerance, and strategy approved

instrumentsofthe Strategic Investment

Qualifying Infrastructure Component.

Prohibition of advances,credits and collateralisation of the components of the Fund.

Risk management principles.

by the Cabinet which shall, at the minimum, specify-

• (i) the balance between risk and return in the overall investment portfolio of the Fund;
• (ii) the criteria for selecting investment assets within the class of qualifying instruments;
• (ili) the determinationof benchmarksand standards against which the performance of the Fund shall be assessed;
• (iv)
• the constraints in investment of the Fund;
• (V) the policies for the appointment,oversight and evaluationof external investment managers and custodians;
• (vi)
• the policies for use of leverage on investment;
• (vii) the policies for risk management;
• (viii) the policies for internal control and audit;
• and
• (ix) such other matters as may be prescribed in the policies of the Board and approved by the Cabinet Secretary; and
• (b) reliable information and regular reporting to assure effective monitoring and management of relevant
• risks within acceptable levels.
• (2) The Board shall,with the approval of the Cabinet Secretary,review at least once every three years,and revise as appropriate, the investment policies of the Fund which shall be consistent with this Act.
• (3) The Board shall publish the risk management framework and the investment policies on the Board's website immediately after the Board determinesor revises
• them.

48. (1) Any investment made under this Act shall be in aqualifying instrument as specified in the Second Schedule.

• (2) Each investment of the Fund shall
• (a) be made in accordance with the approved investment policy,risk management framework, guidelines and strategies

Investmentrules.

• (b) be geared towards assuring maximum return while
• minimising the level ofrisk exposure;
• (c) be made in a prudent manner consistent with institutional portfolio management;
• (d) be made without undue risk to the Fund as a
• whole;and
• (e) have regard to the public interest and the overall macroeconomic and financial stability of the
• economy and market competition.
• (3) Any investment in a foreign jurisdiction shall be undertaken in a manner that meets the requirements of that jurisdiction and safeguard the national interest,including international reputation.
• (4) Any returns earned from investments shall be credited to the respective components of the Fund and may be re-invested in accordance with the provisions of this
• Act.
• (5) Each investment from the Stabilisation Component
• shall-
• (a) to the extent possible,be in a liquid instrument;and
• (b) have a maturity that is consistent with the risks
• covered.
• (6)Each investment in the Strategic Infrastructure Investment Component shall, to the extent possible,be in a liquid instrument with a maturity that is consistent with the expected pay-out schedule for resources identified for utilisation in that year.
• (7) The proportion of investment in each qualifying instrument may be specified by the Cabinet Secretary,on therecommendation of the Board.
• (8) A specification under subsection (7) shall be by notice in the Gazette.

PARTVI-INVESTMENT FUND MANAGERS

• 49.(1) The Board shall,through an open,competitive and transparent process,recruit and appoint such number of investment fund managers as may be required for the proper discharge of its functions.

Appointmentof

investment fund managers.

• (2) The appointment of an investment manager under subsection (1) shall be done on such terms and conditions as the Board shall determine.
• (3) The Board may appoint an investment manager

3. under subsection (l) if the Board is satisfied that the fund manager- 4. (a)meets the minimum technical qualifications 5. prescribed by the Board; 6. (b) is a legal person with sufficient equity capital, adequate risk management,internal control systems, sufficient guarantees and insurance 7. against operational risks; 8. (c) has a sound record of operational and financial 9. performance; 10. (d)has the highest standards ofexperience, 11. (e) has a good track record of managing large 12. knowledge and reputation in fund management; 13. investment portfolios of equivalent or higher magnitudes; 14. (f) can provide such information and reports at such times and in such a manner as the Board may determine; 15. (g) licensed by the relevant authority;and 16. (h) meets any other relevant conditions as may be prescribed by the Board.

• (5) The Board shall undertake due diligence,selection and ongoing monitoring of investment fund managers appointed under subsection (1).
• (6) The Board shall prepare and publish the policies

19. for- 20. (a) due diligence,selection and ongoing monitoring of external investment managers of the Fund;and 21. (b) the appointment of custodians,banking correspondents and other financial intermediaries required for the management of the Fund. 22. 50.(1) An investment fund manager appointed under 23. section 49(1) shall-

• (a) implement the investment policies,strategies and guidelines of the Board in respect to the
• investment of funds;and
• (b) ensure full compliance with the provisions of the
• Third Schedule while making investments.
• (2) An investment fund manager appointed under
• section 49(1) shall prepare and submit to the Board an annual report within two months after the end of each financial year.
• (3) A report prepared and submitted under subsection
• (2) shall include-
• (a) the audited financial statements of the investments and the audit opinion thereof;
• (b) the investment policies applied;
• (c) an explanation of the performance of each
• investment including a comparison with the expectations of the Board about the performance of the portfolio;
• (d) an explanation of how the investment policies
• were complied with during the financial year;
• (e) a list of agents,if any,appointed by the investment fund manager;and
• (f) any other information as the Board may require
• (4) Despite subsection (2),the Board may require a fund manager to submit investment reports as may be necessary.
• (5) An investment fund manager shall provide a performance bond of a nature and value to be determined by the Board.

PART VII-FINANCIALPROVISIONS

Reporting on and audit of the Fund

• 51.(l) Within three months after the end of each financial year, the Board shall prepare and submit consolidated financial statements of the Fund in accordance with the standards set by the Accounting Standards Board for each component of the Fund for onward transmission to the Auditor-General with a copy to the Cabinet Secretary.

Annual financial

statements.

• (2) In this section,"Accounting Standards Board"

2. means the Public Sector Accounting Standards Board established under section 192 of the Public Finance Management Act. 3. 52.The Fund shall be audited by the Auditor-General in accordance with Public Audit Act. 4. 53.(1) The Board shall prepare an annual report 5. relating to each component of the Fund and shall,within six months after the end of each financial year,submit the report to the Cabinet Secretary.

• (2) The Board shall,within fourteen days after the submission of the report under subsection (1),publish and publicise the report in such format as may be prescribed in

7. regulations under the Public Finance Management Act.

• (3) The report prepared under subsection (1) shall include details of-

9. (a) the audited financial statements of the Fund and 10. the audit report; 11. (b) the investment strategies and policies determined 12. by the Board and the level of compliance; 13. (c) the performance of each component of the Fund 14. including- 15. all payments to the Fund during the year it 16. (i) relates; 17. (i) all investments made during the year; 18. (ili) total income received from investments during the year; 19. (iv) an analysis and explanation of performance for each component during the year it relates; 20. and 21. cash balance at the end of the financial year including a list of qualifying instruments used in that financial year;and 22. (d) any other information that the Board considers necessary or as may be directed by the Cabinet Secretary to be included.

• (4) The Cabinet Secretary shall submit the report received under subsection (l) to the National Assembly within fourteen days after receipt.

Cap.412A.

Audit of the Fund.

Cap.412B.

Annualreport of theFund.

PART VIII-MISCELLANEOUS PROVISIONS

• 54.(l) A person who misappropriates any funds or assets from the Fund,or assists or causes any person to misappropriate the funds or assets,or apply the funds or assets otherwise than in the manner provided in this Act, commits an offence and is liable,on conviction to
• (a) pay twice the amount misappropriated;and
• (b)a fine of not less than ten million shillings or
• imprisonment for a term of not less than five years or to both.
• (2) Without prejudice to subsection (1),a person who misappropriates any funds or assets of the Fund,assists or from the Fund,shall be held liable for any loss arising from that loss and shall make good the loss whether that person remains the holder of the office or not.
• 55.A person who contravenes the provisions of this Act where no specific penalty is provided,commits an offence and is liable,on conviction to imprisonment for a term not less than two years or to a fine of not less than five million shillings or to both.
• 56.(1) The monies standing to the credit of the Fund,
• at least three months before a general election,shall be certified by the Board and a report submitted to the National Treasury for transmission to the Auditor-General and the National Assembly.
• (2) The monies in the Fund shall not be withdrawn or transferred from the Fund during the period commencing three months before a general election.
• (3) One month before a general election, the Board shall prepare and submit to the National Treasury for transmission to the Auditor-General and the National
• Assembly a report on the Fund in terms of section 54.
• (4). The Auditor-General shall, based on the reports submitted by the Board under this section,prepare and submit to the National Assembly an audit report on the
• Fund.
• 57.The provisions of the State Corporations Act shall
• not apply to the Sovereign Wealth Fund.

Misappropriation of funds.

General penalty.

Preservation of

thereservesofthe Fund.

Exemption of Cap.446

• 58.This Act shall prevail in all matters relating to the allocation, withdrawal, transfer,investment and management of all revenues from medium and large-scale mining and petroleum operations.
• 59.The Cabinet Secretary may make regulations for the better carrying out of the purposes and objectives of this Act.
• 60.(1) The Cabinet Secretary may appoint an interim manager and staff to administer the Fund pending the constitution of the Board under section 28.
• (2) The interim manager and staff shall manage and administer the Fund in accordance with this Act and the instrument of appointment
• (3) The appointment of the interim manager and staff
• will come to an end upon constitution of the Board.
• (4) Once constituted,the Board shall assume the work of the interim manager and staff,commence the recruitment of the Chief Executive Officer in accordance with section 35(1) and continue performance of its functions as stipulated in this Act.
• 61.The statutes specified in the Fourth Schedule are amended in the manner specified in the Schedule.

Act to prevail.

Regulations.

Transitional provision.

Consequential amendments.

FIRST SCHEDULE(s.32)

Conduct of the business and affairs of the Board

• 1.(1) The Board shall meet at least four times in every financial year and not more than three months shall elapse between the date of the next meeting.
• (2) Unless three-quarters of all members of the Board otherwise agree, at least fourteen days written notice of every meeting of the Board shall be given to every member of the Board.
• (3) The quorum for the conduct of the business of the
• Board shall be five members.
• (4) The Chairperson shall preside at every meeting of the Board at which he or she is present but in his or her absence, the members present shall elect one of their members to preside at the meeting and,with respect to that meeting and the business transacted thereat, that member shall have all the powers of the chairperson.
• 2.The decisions of the Board shall be adopted by a which the decision is made and in case of an equality of votes the chairperson or the member presiding at the meeting shall have a second or casting vote.
• 3.The proceedings of the Board shall not be invalid by reason only of a vacancy among the members thereof.

4. Subject to the provisions of this Schedule, the

• Board shall determine its own procedure.
• 5.The Board may invite any person to attend any of
• its meetings to participate in its deliberations,but such person shall not have a vote in any decision of the Board.
• 6.(1) A member of the Board who has a material personal interest in a matter subject to discussions by the Board shall, as soon as reasonably practicable after the commencement thereof,disclose his or her interest in the matter and shall not take part in the deliberations over,or vote on, the matter;
• (2) A disclosure of interest made under this paragraph shall be recorded in the minutes of the meeting at which it is made;

Meetings of the Board

Decisions of the Board.

Validity of

proceedings.

Board to determine own procedure.

Co-option of

members.

Disclosure of

Interest

• (3) Where a member of the Board discloses conflict of interest,that member shall not exact undue influence to any other member of the Board on that matter;and
• (4) A member of the Board who contravenes subparagraph (l) commits an offence and is liable, on conviction,to imprisonment for a term not exceeding three years or to a fine not exceeding one million shillings or both.

3. 7.The Board shall cause minutes of all proceedings of its meetings to be entered in its records for that purpose. 4. Minutes.

SECOND SCHEDULE (ss.43,44,45)

• 1.In the case of the Future Generations Component, the qualifying instruments are-

Qualifying instruments

• instrument denominated in an
• (i) that has investment grade rating from internationally recognised rating agencies;and
• (a)afinancial internationally convertible currency-
• (ii) that is issued by or guaranteed by the International Monetary Fund,World Bank or by a sovereign State other than the Republic of Kenya, if the issuer or guarantor has an investment grade rating from an internationally
• recognised rating agency;
• (b) an internationally convertible currency deposit that bears interest placed with theBank for International Settlements;
• (c) an internationally convertible currency deposit with a foreign central bank,any central bank established within regional economic bloc,a public international financial institution,ora foreign commercial bank that meets a minimum capital adequacy ratio set by internationally recognised standards body and has investments credit rating;
• (d) any other instrument prescribed by the Cabinet Secretary by notice in the Gazette on the recommendation of the Board;or
• (e) a derivative instrument-
• (i) that is solely based on an instrument that
• satisfies the requirements of paragraphs (a) and (b); and
• (ii) where its acquisition reduces the financial exposure to the risks associated with the underlying instruments prescribed by the
• Cabinet Secretary under paragraph (d).

Qualifying instruments for the Future Generations Component.

• 2.In the case of the Stabilisation Component,the
• qualifying instruments are-
• (a)adebt instrument denominated in
• an internationally convertible currency-
• (i) that has an investment credit rating from an internationally recognised rating agency;and
• internationally recognised rating agency;
• 11 that is issued by or guaranteed by the International Monetary Fund,World Bank or by a sovereign State other than the Republic of Kenya,if the issuer or guarantor has an investment grade rating from an
• (b) an internationally convertible currency deposit that bears interest placed with
• theBankfor International Settlements;
• (c) an internationally convertible currency deposit with a foreign central bank,any central bank established within regional economic block,a public international financial institution,or a foreign commercial bank that meets a minimum capital adequacy ratio set by an internationally recognised standards body and has an investment credit rating from an internationally recognised
• rating agency;
• (d) any other instrument prescribed by the Cabinet Secretary by notice in the Gazette on the
• recommendation of the Board;or
• (e)a derivative instrument-
• (i) that is solely based on an instrument that satisfies the requirements of paragraphs (a) and (b);and
• where its acquisition reduces the financial exposure to the risks associated with the instruments prescribed by the Cabinet
• 3.In the case of the Strategic Infrastructure Investment Component,the qualifying instruments are
• Secretary under paragraph (d).

instruments for the Stabilisation

Qualifying Component.

Qualifying instruments for the Strategic Infrastructure Investment

Component.

• (a)a debt instrument denominated in internationally convertible currency;
• an
• (b) an internationally convertible currency deposit that bears competitive interestplaced with the Bank for
• International Settlements or a commercial bank;
• (c) a derivative instrument-
• (i) that is solely based on an instrument that satisfies the requirements of paragraphs (a) and (b); and
• (ii) where its acquisition reduces the financial exposure to the risks associatedwith underlying instruments prescribed by the Cabinet Secretary under paragraph (d);or
• Cabinet Secretary by notice in the Gazette on the recommendation of the Board.

THIRD SCHEDULE(s.50)

Guidelines on service level agreements for an investment fund manager

• 1.The responsibilities of an investment fund manager,appointed by and acting on behalf of the Board under the terms of a service level agrecment,shall include
• but shall not be limited to, the following-
• (a) managing assets and other resources of the Fund in accordance with this Act,and the prudent investor standard of an investment fund manager engaged
• in the asset management profession;
• (b) investing assets and other resources of the Fund in accordance with this Act,and the operational and
• investment guidelines developed under this Act;
• (c) selection and retention,on behalf of the Fund, appropriate third-party service providers,including advisors, to carry out competently the mandate specified in the instrument of delegation in accordance with the relevant written law;
• (d) maintaining records and documentary support for all investments,receipts,disbursements and other transactions relating to the management of the Fund in accordance with internationally accepted accounting standards;
• (e) submitting reports to the Board on the holdings, performance and risk of the Fund;
• submitting an annual report of the investment management to the Board not later than two
• months after the end of the financial year;and
• (g) the reports referred to in paragraphs (e) and (f) shall be accompanied by a certificate signed by the internal auditors of the investment fund manager and acertified investment report on the performance of the Fund.
• 2.The annual management fee payable to investment fund manager shall be specified in the instrument of appointment.

Responsibilities of aninvestment fund manager.

Fees.

FOURTH SCHEDULE(S.6I)

Consequential amendments

• 1.Section 186 of the Mining Act is amended by-
• (a) by deleting subsection (l) and substituting therefor
• the following new subsection
• (1) All fees,charges and royalties payable by the holder to the State under this Act shall be paid
• to the Collector.
• (b) by inserting the following new subsections
• immediately after subsection (1)-
• (1A) The fees,charges and royalties payable
• under this Act shall beremitted by the Collector to the Sovereign Wealth Fund.
• (1B) The royalties payable under section
• 183(5)(a) shall be remitted by the Collector to the Sovereign Wealth Fund.
• (1C) The royalties payable under section 183(5)(b) and (c) shall beremitted by the Collector to the designated account of the State Department
• responsible for mining.
• (1D) For the purposes of this section,
• "Collector" means the Commissioner-General appointed under section 1l of the Kenya Revenue Authority Act.
• 2.Section 53 of the Petroleum Act is amended-
• (a) in subsection (2),by deleting the words "National Governmentand substituting therefor the word
• "Collector";
• (b) in subsection (3),by deleting the words "National taxes" and substituting therefortheword
• Government agency responsible for collection of "Collector";
• thefollowing new subsections
• (c) byadding immediately after subsection (4)-

Amendment of section186of

Cap.306.

Cap.469.

Amendment to section53 of Cap. 308.

• (5) The following payments and revenues

2. payable from upstream petroleum operations shall be paid to the Collector- 3. (a)the National Government's share ofprofit petroleum excluding the share of profit payable under section 58(2) and (3);

• b) the royalties referred to under section 53(3);

5. (c) 6. the signature bonus payable under section 55(1); 7. (P) the annual fees payable under section 54(1) excluding the training fees specified under section54(2)(b);and 8. (e) the signature bonus payable under section 55(1). 9. (6) The Collector shall remit to the Sovereign 10. Wealth Fund the revenues payableunder subsection (2).

• (7) For the purposes ofthis section, "Collector" means the Commissioner-General appointed under section ll of the Kenya Revenue Authority Act.

12. 3.Section 57 of the Petroleum Act is amended by deleting subsection (2). 13. 4.The First Schedule to the Kenya Revenue Authority Act is amended in Part Il,by inserting the followingnew items immediately afteritem 15- 14. 16.The Mining Act. 15. 17.Petroleum Act.

Cap.469.

Amendment to section 57 of Cap. 308.

Amendment of the First Schedule to Cap.469

Cap.306.

Cap.308.

MEMORANDUM OF OBJECTS AND REASONS

The principal object of the Sovereign Wealth Fund Bill,2026,is to establish the Sovereign Wealth Fund;to provide institutional arrangements for the effective administration and efficient management of minerals and petroleum revenues,and monies from other sources allocated to the Fund; and for connected purposes. The Bill also proposes to make consequential amendments the MiningAct and Petroleum Act.

Part I of the Bill (clauses 1 to 3) provides for preliminary provisions including the short title and commencement of the Act; the definition of key terms used in the Act;and the guiding values and principles of the

Act.

Part II of the Bill (clauses 4 to 8) provides for the establishment of

the Sovereign Wealth Fund; the object and purpose of the Fund; the sources of funds from the Fund;the establishment of the Holding Account to hold the resources and assets of the Fund;and the general principles relating to withdrawals from theFund.

Part Il also provides for the organisation of the Fund into the Stabilisation Component,Strategic Infrastructure Investment Component and Future Generations Component; the sources of funds for the components of the Fund; the procedures for withdrawals and transfers from or out of the components of the Fund; and the effect of the depletion

of mineral and petroleum resources on the organisation of the Fund.

Part Ill of the Bill (clauses 19 to 24) provides for fiscal

responsibility principles applicable to the Fund including the application of the Public Finance Management Act on the operation and management of the Fund;the manner of enforcing the fiscal responsibility principles; the designation of the Administrator of the Fund and the way by which the Administrator shall report on the Fund; the preparation of the annual administrator; and the connection of the Fund to the annual national government budgetprocess.

Part IV of the Bill (clauses (25 to 41) provides for the management of the Fund including the establishment of the Sovereign Wealth Find Board; the qualifications, appointment, tenure and remuneration of the members of the Board;the manner of filling in vacancies in the Board;the meetings and committees of the Board; the appointment of the Chief Executive Officer and staff of the Board; the code of conduct applicable to the members of the Board,Chief Executive Officer and staff of the Board;

the protection of members of the Board, Chief Executive Officer and staff of the Board from personal liability in respect to their official functions;

the duty of confidentiality;and the common seal of the Board.

Part V of the Bill (clauses 42 to 48) provides for the investment of theFund including provisions relating to qualifying investment instruments of the components of the Fund;prohibited instruments;risk

management principles;and investment rules.

Part VI of the Bill (clauses 49 and 50)provides for the appointment by the Board and functions of investment managers of the Fund.

Part VII of the Bill (clauses 51 to 53 provides for financial matters including the annual financial statements of the Fund;the manner of auditing the Fund;and the preparation and submission of the annual report of the Fund.

Part VIll of the Bill (clauses 54 to 61) provides for miscellaneous

matters including the offence of,and penalty for,the misappropriation of the funds and assets of the Fund;a general penalty;the manner of preserving the reserves of the Fund before and during a general election; that the Act shall prevail in respect of allocation,withdrawal,transfer, investment and management of all revenues from medium and large-scale mining and petroleum operations;the power to make regulations by the cabinet Secretary;and consequential amendments.

The First Schedule to the Bill deals with the conduct of the business and affairs of the Board.

The Second Schedule to the Bill deals with the types of qualifying

The Third Schedule to the Bill provides for the guidelines on

investment instruments applicable to the components of the Fund.

service level agreements for an investment fund manager.

amendments to the Mining Act,Petroleum Act and Kenya Revenue AuthorityAct.

The Fourth Schedule to the Bill provides for consequential

Statement on the delegation of legislative powers and limitation of fundamental rights and freedoms

The Bill confers on the Cabinet Secretary the powers to make Regulations under the Act for the purposes of operationalizing the Act in order to implement the objectives.

The Bill does not limit any fundamental rights or freedoms.

Statement on how the Bill concerns County Governments

The Bill does not concern county governments as it does not affect

the functions and powers of county governments as set out in the Fourth Schedule to the Constitution.

Statement of the Bill as a money Bill within the meaning of Article 114 of the Constitution

The Bill is a Money Bill within Article 1l4 of the Constitution as it relates to receipt,custody,investment or issue of public money.

Dated the25th February,2026.

KIMANIICHUNG'WAH, Leader of Majority Party.

Section 186of Cap.306which isproposed to amend-

186.Payment of fees,charges and royalties

• (1) All fees, charges and royalties payable by the holder to the State under this Act shall be paid by the holder into the designated account of the State department responsible for collecting royalties.
• (2) A payment shall be accompanied by a statement from the holder stating

3. (a) details of the mineral or mineral product; 4. (b) the relevant point of sale;and 5. (c) the date and the amount of royalty paid

• (3) A copy of the statement shall be delivered to the Mining Cadastre Office.
• (4) A mineral right holder shall report the royalty liability for each month by the fifth business day of the month.
• (5) Upon receipt of a royalty payment the State department responsible for collecting royalties shall issue a receipt.

Section 53 of Cap.308which is proposed to amend-

53. Contractor to comply with financial and fiscal obligations in agreement

• (1) The contractor shall comply with financial and fiscal obligations in the implementation of the petroleum agreement under this Act and any otherwrittenlaw.
• (2) The contractor shall pay to the National Government all taxes, relevant fees and levies in such manner as may be prescribed by both the petroleum agreement and any otherrelevant laws.
• (3) Taxes,profit petroleum and royalties from upstream petroleum operations shall be collected in accordance with the relevant tax laws and accounts provided to the National Government agency responsible for collection of taxes in the manner it prescribes.
• (4) Where a person fails to make a payment under this Act when the amount falls due,the person shall pay such penalty as shall be prescribed in the production sharing contract or any other petroleum agreement.Such penalty shall be without prejudice to the National Government exercising any other remedies available in law.

Section 57 of Cap.308which is proposed to amend-

57.Petroleum revenue

• (1) The profit derived from upstream petroleum operations shall be shared between the contractor and the National Government in accordance with thepetroleum agreement.

• (2) The national government's share of petroleum revenues before the imposition of taxesshall be deposited into a dedicatedpetroleumfund,and managed in accordance with the Public Finance Management Act (Cap. 412A) and any otherrelevant law.

First Schedule to Cap.469 which is proposed to amend-

PartI

FIRST SCHEDULE[s.2&5] WRITTENLAWS RELATING TO REVENUE

1. The Income Tax Act (Cap. 470). 2. 2.Spent. 3. The Value Added Tax Act (Cap.476). 4. The Road Maintenance Levy Fund Act (Cap. 427). 6. The Entertainment Tax Act (Cap. 479). 5. The Air Passenger Service Charge Act (Cap. 475). 7. The East African Community Customs Management Act (No. 1 of 8. 2005). 9. 8.The Annexes to the Protocol on the Establishment of the East African Community Customs Union. 10. 9.Spent. 10. Excise Duty Act (Cap. 472). 11. Tax Procedures Act (Cap.469B). 12. Miscellaneous Fees and Levies Act (Cap. 469C) 13. The Alcoholic Drinks Act (Cap. 121).

Part II

1. The Traffic Act (Cap. 403). 2. 2.Spent. 3. The Second-Hand Motor Vehicles Purchase Tax Act (Cap. 484). 4. The Civil Aviation Act (Cap. 394). 5. The Widows' and Children's Pensions Act (Cap. 195). 6. The Parliamentary Pensions Act (Cap. 196). 7. The Gambling Control Act (No. 14 of 2025).

• 8.The Stamp Duty Act (Cap.480).
• 9.The Horticultural Crops Development Authority (Imposition of Fees and Charges) Order,1995 (L.N.225of 1995).
• 10.The Standards Levy Order,1990 (L.N.267 of 1990).
• 10A. The Industrial Training Act (Cap.237).

11. The Government Lands Act (Cap.280).

• 12.The Sugar Act (No.10 of 2001) (Repealed).
• 13.The National Social Security Fund Act (Cap.258).
• 14.Public Finance Management Act (Cap.412A).
• 15.The Affordable Housing Act,2024.