What happened
The Nairobi International Financial Centre (NIFC) announced a proposal to create a Sh65 billion ($500 million) fund aimed at Kenyan businesses. Half of the capital – about Sh32.5 billion ($250 million) – would be earmarked for technology and artificial‑intelligence (AI) startups, while the remaining half would support small and medium‑sized enterprises (SMEs) in other sectors. NIFC intends to pool both local and international venture‑capital resources, with the centre leading fundraising and company assessment. The fund is still at the proposal stage; NIFC is selecting a co‑hosting organisation and a professional fund manager, and says investors have expressed interest, though no firm commitments or timelines have been disclosed.
The Nairobi International Financial Centre (NIFC), which became operational in 2022, outlined a plan to establish a Sh65 billion ($500 million) fund targeting Kenyan enterprises. According to NIFC chief executive Daniel Mainda, the fund would be split evenly: roughly Sh32.5 billion ($250 million) for technology and AI startups and the same amount for SMEs in other sectors.
NIFC intends to aggregate capital from both domestic and international venture‑capital sources. The centre will lead fundraising efforts and conduct due‑diligence assessments of prospective portfolio companies. At present, the fund is still in the proposal phase; NIFC is in the process of selecting an organisation to co‑host the fund alongside a professional fund manager. Mainda noted that investors have shown interest, but no binding commitments or launch timeline have been disclosed.
The proposal emerges against a backdrop of declining venture funding in Kenya. In the six months ending June 2026, Kenyan startups raised Sh16 billion, a 45 % drop from Sh29 billion a year earlier, marking the weakest first half since 2021. International investors have become more selective, intensifying the need for domestic capital sources.
Why it matters
Kenya’s startup ecosystem has seen a sharp funding contraction, with venture capital raised falling 45 % in the first half of 2026 compared with the same period a year earlier. By earmarking a dedicated $250 million pool for tech and AI ventures, the proposed fund could help bridge a critical capital gap for high‑growth companies that are otherwise struggling to attract foreign investment. If realised, the fund would also signal a strategic shift for the Nairobi International Financial Centre, moving from a role that primarily attracts foreign financial institutions to one that actively channels capital into domestic innovators. This could accelerate the development of AI capabilities in East Africa, foster job creation, and potentially position Kenya as a regional hub for AI‑driven solutions. However, the proposal remains uncommitted, and the actual impact will depend on securing investors, finalising the fund structure, and delivering on the promised allocations.
The fund could address a pronounced financing shortfall for Kenyan AI and tech startups, which are essential for building a competitive digital economy in East Africa. By allocating a dedicated $250 million pool, the initiative may attract additional private‑sector interest and stimulate the creation of AI‑driven products and services tailored to local challenges.
If successful, the fund would expand NIFC’s mandate beyond attracting foreign financial institutions to actively channeling capital into the Kenyan economy. Since its inception, NIFC has facilitated about Sh26 billion ($200 million) in foreign direct investment and aims to reach Sh650 billion ($5 billion) and 150 certified companies by 2030. A domestic venture fund would complement these efforts by providing growth capital to early‑stage innovators.
The proposal also signals a broader policy intent to nurture an AI ecosystem in Kenya, potentially encouraging talent retention, skill development, and the emergence of home‑grown AI solutions. However, the lack of firm commitments and a clear rollout schedule introduces uncertainty about the fund’s actual impact.
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What to watch next
Key indicators to monitor include the selection of a co‑hosting partner and professional fund manager, the signing of firm capital commitments, and the timeline for the fund’s launch. Tracking the volume of capital actually deployed to AI startups versus other SMEs will reveal whether the fund meets its stated balance. Additionally, observing any policy changes or incentives from the Kenyan government that could affect the fund’s operation will be important for assessing its long‑term sustainability.
Selection of a co‑hosting partner and professional fund manager – this will indicate the fund’s governance structure and credibility.
Securing concrete capital commitments from investors – the amount and source (local vs. international) will affect the fund’s capacity to meet its allocation goals.
Timeline for fund launch and first disbursements – a clear schedule will help gauge momentum and investor confidence.
Proportion of capital deployed to AI and tech startups versus other SMEs – monitoring this split will reveal whether the fund adheres to its stated 50/50 allocation.
Any accompanying regulatory or fiscal incentives from the Kenyan government that could facilitate fund operations or attract additional investors.