Kenya plans to launch a sovereign wealth fund to manage earnings from oil and mineral resources, providing a buffer against economic shocks and commodity price volatility, Bloomberg reported.

The country’s natural resource portfolio has grown steadily since the first commercially viable oil discovery in 2012 at the Lokichar Basin. Kenya also possesses significant deposits of gold, soda ash, titanium, iron ore, fluorspar, and gemstones, offering long-term revenue potential if managed prudently.

The proposed fund will have three components. A stabilization unit is intended to cushion government finances during price swings, an infrastructure investment arm will channel funds into long-term projects, and a savings segment will preserve wealth for future generations.

Strict rules will govern the fund’s investments. It will not allocate resources to speculative derivatives, private equity, unlisted real estate, art, or commodities. Lending to government agencies or providing collateral for borrowing is also prohibited under the draft legislation.

Governance arrangements allow flexibility. The fund’s board may appoint multiple investment managers or designate the Central Bank of Kenya as custodian, manager, and administrator of its assets.