Kenya Trapped in Debt Cycle as Ksh.7 of Every Ksh.10 Goes to Repayment – Report
Kenya is sinking deeper into a financial crisis as the Okoa Uchumi public debt report reveals that Ksh.7 of every Ksh.10 collected by the government goes toward debt repayment, leaving limited resources for essential services. The alarming findings underscore the urgency of addressing Kenya’s debt burden, which experts warn is spiraling out of control.
Kenya’s Debt at a Critical Level
According to the report released on Tuesday, Kenya’s total public debt has reached Ksh.11.81 trillion, with Ksh.6.3 trillion in domestic debt and Ksh.5.48 trillion in external loans. The analysis shows that domestic borrowing now exceeds foreign borrowing, raising concerns over poor accountability and potential misuse.
“Kenya is already in a debt crisis. Domestic debt has overtaken foreign debt and is more prone to misuse. With external debt, we can track the funds, but for domestic debt, we cannot,” said Alexander Riithi, Head of Programs at The Institute for Social Accountability (TISA).
Experts argue that international creditors closely monitor foreign loans, but domestic borrowing escapes oversight, enabling officials to divert funds through opaque systems.
Debt Burden Stifling Development
The report paints a grim picture of a nation caught in a debt trap, with only Ksh.3 out of every Ksh.10 available for other government operations. This limited fiscal space has severely constrained funding for public services, including education, healthcare, and infrastructure.
Riithi emphasized that massive corruption and poor fiscal discipline have worsened the situation. “About 30 percent of our population is unemployed. We have an education system that hasn’t been tested. Kenyans are telling us the health sector has become a killing field, where you don’t know if you will survive tomorrow,” he said.
Civil Society Demands Urgent Reforms
Civil society groups and lawmakers are urging the government to ban supplementary budgets, reform the National Government Constituencies Development Fund (NG-CDF), and fully disclose all public loans. They argue that supplementary budgets often increase spending beyond approved limits, widening the fiscal deficit.
“We urge the government to completely do away with supplementary budgets. Each one increases the fiscal gap with expenditures we did not approve. Diana Gichengo, Executive Director of TISA, said, “We must also reform the NG-CDF.”
The report further calls for an end to new World Bank and IMF loans, which critics say perpetuate dependency and hinder local economic autonomy. “We need to get off the yoke of the World Bank and IMF. These institutions were created to rebuild Europe after the World War. How does that plan help Africa’s development?” questioned Saboti MP Caleb Amisi.
The Risk of a Permanent Debt Crisis
Economists warn that Kenya risks falling into a permanent debt cycle unless leaders take immediate corrective action.With the economy struggling to generate sufficient revenue and unemployment rising, debt repayment continues to outpace development spending.
The Okoa Uchumi report serves as a wake-up call for policymakers to adopt sustainable fiscal policies and improve transparency in debt management. Without meaningful reforms, the country’s long-term economic stability remains at risk.
