Kenya’s ballooning debt-service bill is crowding out funds for healthcare, education and development, a new UN Conference on Trade and Development (UNCTAD) report warns. Interest on domestic and external loans swallowed 29.3% of Kenya’s net revenue in FY 2023/24 (Sh 840.7 billion), more than double the 9.5% share in 2010 and the third-highest ratio in Africa after Egypt and Angola. The Treasury’s own data show interest now eclipses combined budgets for health (Sh 318.1 billion) and education (Sh 681.9 billion), while total public debt stands at Sh 7.02 trillion. With revenue collections lagging—Kenya Revenue Authority raised Sh 2.26 trillion by April versus a Sh 2.51 trillion target—the government faces heavier borrowing to plug a Sh 4.29 trillion 2025/26 budget and must fund Sh 1.1 trillion in interest through July 2026.
UNCTAD flags rising sovereign-risk, tax-fraud vulnerabilities and shrinking fiscal space, noting 22 countries worldwide now spend more on interest than on health, and 45 spend more than on education. Treasury CS Njuguna Ndung’u says costly infrastructure loans maturing between 2027 and 2032 are intensifying pressure; the present value of public debt is 63% of GDP, below the 55% IMF threshold, yet debt-service consumes four shillings of every ten in revenue. Nairobi has axed fresh tax-plan ambitions, trimmed ordinary-revenue forecasts to Sh 2.49 trillion and slashed Finance Bill 2025 projections to Sh 301 billion, signalling limited scope for new levies. Analysts warn failure to tame debt-service could trigger social unrest and undermine future capital investment unless Kenya restructures obligations, widens its tax base and restores growth-led revenues.
Beyond the grim arithmetic of debt service ratios and crowded-out social budgets lies a deeper institutional malaise, one rooted in decades of political capture and cyclical technocratic fixes. Even as Treasury technocrats ritualistically pledge fiscal consolidation, the State House’s supplementary allocation of Sh3.7 billion for domestic travel and hospitality exposes the unbroken pattern of elite accommodation that has characterized Kenya’s fiscal governance since the Goldenberg era. Kenya’s shift from absolute debt ceilings (2014) to GDP ratios mirrored earlier eras of rule-bending, where legal frameworks became mere suggestions when expedient, a tradition now culminating in the abandoned IMF review and creative reengineering of tax relief to quietly extract more from salaried workers. Can a system that increased State House vehicle maintenance budgets by 89% (Sh497.5 million) while schools and hospitals starve genuinely claim austerity?
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