The decision comes amid concerns over the fund’s creation and management, raising questions about executive authority and parliamentary oversight.
The petition, filed by Dr. Margaret Gikenyi, J. Benjamin, Eliud Matindi, and two others, argued that the NIF was established through a State House communiqué rather than through legislation passed by Parliament, as required by the Constitution.
They claim this bypasses critical checks and balances designed to protect public finances.
Justice Bahati Mwamuye, presiding over the case at the Milimani Law Courts, granted a conservatory order halting the government from proceeding with the fund.
The judge stated that, pending further hearings, the government and its agencies are restrained from establishing, registering, operationalizing, or funding the NIF in any form.
The petitioners contended that public funds can only be created by Parliament and warned that the NIF could lead to executive overreach.
They further raised concerns about registering the fund as a Limited Liability Company (LLC), arguing that this structure could place trillions of shillings outside parliamentary oversight and beyond the auditing authority of the Auditor-General.
They described the move as creating a “shadow treasury” with high potential for financial mismanagement.
Another major point of contention was the government’s plan to use National Social Security Fund (NSSF) savings as seed capital for the fund.
Critics, including Kiharu MP Ndindi Nyoro, warned that diverting pension contributions into infrastructure projects without parliamentary approval would be illegal and could jeopardize retirement savings.
Despite the court’s intervention, the government has defended the NIF as a strategic initiative aimed at transforming Kenya’s economy.
President William Ruto described the fund as a tool to reduce reliance on debt-financed development, leveraging private capital from pension funds, insurance firms, and sovereign wealth funds.
The President argued that each shilling of public money invested would attract up to ten shillings in private investment.
Before being halted, the fund was expected to finance major infrastructure projects across sectors such as agriculture, transport, and energy.
Planned initiatives included constructing mega dams, expanding roads and railway networks, extending the Standard Gauge Railway to the Ugandan border, and adding 10,000 megawatts of renewable energy capacity.
The High Court has scheduled the next hearing for January 20, 2026, where it will determine whether the temporary halt will remain or if the government may proceed with the fund.
Meanwhile, public debate continues over the balance between rapid development and constitutional accountability.
The ruling has sparked mixed reactions from Kenyans.
Supporters of the fund argue that it is necessary for Kenya’s long-term development and modernization, while critics insist that bypassing parliamentary processes undermines transparency and threatens public trust.
Many legal analysts have noted that the case could set a precedent regarding the limits of executive power in public finance.
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