Every month, Kenya earns billions in revenue — but before schools, hospitals, or infrastructure projects can be funded, 70% of that money goes straight into debt repayment.
A new report by the Controller of Budget (CoB) exposes the country’s worsening financial struggle: KSh 7 out of every KSh 10 collected by the government is spent on repaying loans, leaving only a fraction for development.
This means the government is essentially borrowing to pay off other loans — a cycle that keeps tightening and threatening the country’s financial independence.
The Cost of Borrowing: Interest Over Growth
The report shows Kenya spent KSh 632.3 billion on interest payments alone, compared to KSh 360.1 billion used to reduce the actual debt.
This imbalance means Kenya isn’t paying off what it owes — it’s merely keeping creditors satisfied while the principal amount remains untouched.
Experts warn this situation is unsustainable. As more money goes to interest, less is left to fund projects that create jobs or improve livelihoods.
“We are servicing debt instead of building the nation,” said one economic analyst.
“It’s like paying rent for a house you’ll never own.”
Who Bears the Cost?
Ordinary Kenyans feel the brunt of this crisis.
Essential services like healthcare, education, and county development projects face massive cuts. Counties are reporting delayed funds, while the cost of living keeps rising.
With less money for social programs, Kenyans continue to pay higher taxes without seeing meaningful change. The National Treasury has increasingly turned to domestic borrowing — short-term loans that come with high interest rates — worsening the problem further.
A Vicious Cycle
Kenya’s public debt now stands at KSh 11.73 trillion, with both domestic and external borrowing at record highs.
The government’s decision to borrow locally to plug deficits is creating an expensive loop — borrowing from Kenyan banks at high interest rates, only to use new loans to pay off old ones.
Economists say this is how nations slip into a debt trap — a state where new borrowing only fuels more debt instead of growth.
Possible Way Out
The Controller of Budget recommends several urgent measures:
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Shift focus to concessional foreign loans with lower interest rates.
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Restructure domestic debt to extend repayment periods.
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Improve tax collection efficiency while sealing revenue leakages.
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Cut down on recurrent spending, including unnecessary administrative costs.
If not addressed, Kenya’s debt crisis could lead to even tighter austerity measures, reduced government spending, and slower economic recovery.
A Wake-Up Call
For many Kenyans, this report is not just about numbers — it’s a reflection of how government decisions affect everyday life.
From delayed salaries to stalled projects and inflation, the impact of debt repayment is felt in every corner of the country.
Kenya is at a crossroads: it can either continue to sink under the weight of debt or choose a new path focused on sustainable growth and fiscal discipline.
As the CoB report warns, the time for financial reform is now — or Kenya risks paying for its debts long after the loans are gone.
