Kenya's debt pile hits Sh13 trillion as borrowing draws scrutiny

Kenya faces a deep financial crisis as public debt hit Sh13.08 trillion in June.[File, Standard]

Kenya faces a deep financial crisis as public debt hit Sh13.08 trillion in June, raising concern from both oversight bodies and political figures about how the government borrows and accounts for the money.

Dr Samuel Kinyanjui, County Director for AIDS Healthcare Foundation (AHF), warns that the nation is bleeding money every single day due to the soaring public debt. Kinyanjui says this economic pain is not an accident but an extraction system built by forces without public input.

The country spends a massive portion of its budget just to pay back what it owes, with between 65 to 71 per cent of the available national budget going straight into servicing debt. Only 8 per cent remains for real development and investments.

“Our public debt is Sh13 trillion. Our country is bleeding revenue that we are hemorrhaging every single day,” Kinyanjui said, warning that the debt burden is depriving the country of resources needed to finance development and secure the future of future generations.

“A country that spends nine times more on paying debt is like auctioning the lives and prosperity of future generations,” he said yesterday during a youth petitioning Members of Parliament to declare the debt burden a national emergency.

Safina party leader Jimmy Wanjigi considers Kenya’s debt system a ponzi scheme designed to divert tax revenues. Citing a forensic audit he commissioned, Wanjigi claims billions of shillings borrowed over the past four financial years cannot be accounted for. He also alleges that some loans were taken without parliamentary approval.

These concerns coincide with recent warnings by Auditor General Nancy Gathungu that Kenya lacks a single, standalone financial statement detailing its true debt position.

She noted that National Treasury reports do not factor the billions of shillings that are tied up in off-balance-sheet loans. Instead, the Auditor General noted, the debt status is only included as an annexure in the Consolidated Fund Statement of expenditure.

According to Wanjigi’s debt audit, huge figures were borrowed against the provisions of the Public Finance Management Act that require the National Treasury to administer the Consolidated Fund, an account where all monies raised by or on behalf of the National Government reside.

Further, he argues that the unauthorised public debt was made possible in 2014 through the amendment of the constitutional requirement under Article 206(1) that required all receipts from loan money be paid into the Consolidated Fund by introducing two exceptions which had not been provided for under Article 206. This, he explained, has made it possible to divert some of the loans to areas they were not intended for.

This was seen in the case of the inaugural Eurobond, in which an audit by the Auditor General later found that the Sh357 billion ($2.75 billion) raised never hit the Consolidated Fund.

“One of the new exceptions directed that monies may be disbursed directly to the suppliers where the loan is a government-to-government loan and is raised for the purpose of financing goods and services provided by a supplier outside Kenya,” said Wanjigi.

He claimed that following this amendment, some shadow figures in former President Uhuru Kenyatta’s administration opened Sovereign Bond accounts where the loans and bonds were deposited outside the Consolidated Fund.

Wanjigi claims that this practice continues to date, with some of the loans borrowed in subsequent years ending up outside the Consolidated Fund.

He also claimed huge loans have been borrowed without the authority and appropriation by Parliament and that there were no projects linked to the debts.

“Since President Ruto took over, the debts have risen to Sh13 trillion, yet he has paid Sh7.3 trillion begging the question: where is the Sh6 trillion,” Wanjigi said.

Treasury documents show that the government paid Sh1.2 trillion to service public debt over the 2023/24 financial year and another Sh1.9 trillion in 2024/25. Over the 2025/26 financial year, it is projected to have paid Sh2.4 trillion, with total debt service including both interest and principal debt totaling to Sh5.9 trillion over the three financial years.

Wanjigi noted that despite the repayments taking a substantial chunk of the budget, debt continued to skyrocket. He also said that in numerous instances, the loans cannot be traced to any development projects.

To demonstrate the extent to which Kenya has been taking on odious debts, Wanjigi’s debt audit found out that over the nine years to June 2023, a substantial chunk of the debt servicing was never approved by Parliament.

The audit showed that over the financial years between 2014/15 and 2022/23, Kenya serviced debt to the tune of Sh7.075 trillion. It however, points to the repayment of more than Sh4.97 trillion and claims that it was never approved by Parliament. The entire amount constituted loans borrowed locally, which Wanjigi also claimed could not be linked to any development project.

“Of the Sh7.075 trillion, only the repayment of Sh2.29 trillion external debts were approved by Parliament and assented to by the President. The paid domestic debts of Sh4.975 trillion were not authorised by Parliament and cannot be linked to projects. They were not borrowed for the approved budget as required under Sections 15 and 50 of the Public Finance Management Act,” he said.

Treasury documents show that Kenya’s stock of public debt stood at Sh9.146 trillion by the end of 2022, consisting of domestic debt of Sh4.47 trillion and external debt of Sh4.67 trillion.

“Having repaid Sh7.075 trillion and still having a debt stock of Sh9.146 trillion means the aggregate incidence of debt is Sh16.22 trillion. The only legally approved debt is Sh2.29 trillion external debt, whereby Sh1.26 trillion was repaid together with interest of Sh835.93 trillion,” he said.

“Therefore, the legally recognised debt liability by Kenyan public totals to Sh3.179 trillion out of Sh16.22 trillion. Hence, Sh13 trillion was contrary to the Public Finance Management Act.”

The Auditor General recently pointed out that the country does not have comprehensive financial statements showing Kenya’s exact debt position. Treasury has instead been including debt status as an annexure to the Consolidated Fund Statement of expenditure.

“The Office observes that effective public debt governance requires transparency in borrowing decisions, adequate legislative oversight, comprehensive disclosure and reporting, strong internal controls, sustainable debt management practices, value-for-money assessments and effective monitoring of debt-funded projects,” said the Auditor General in a recent presentation on debt that further raised concerns about emerging and hidden types of debt such as securitisation of taxes.

The Controller of Budget has also raised concerns about reporting on debt and call the amendment of the Public Finance Management Act, 2012 to place a clear statutory duty on the National Treasury to establish and maintain the Public Debt Registry, rather than pursue new stand-alone legislation, consistent with the CoB's earlier submissions on the PFM Amendment Bill process.

Wanjigi, who is eyeing Kenya’s presidency in next year’s general elections, said if elected President, he would suspend loan repayments and immediately commission a forensic debt audit.

“As long as there's that hemorrhage, how are people going to get jobs? How do you deal with health care? How do you deal with development? Lack of it. It has taken money from our taxes. It is taking money from our banks. The Auditor General will be empowered to carry out a public forensic audit of the debt within six months since the audit is private,” he said.

He maintained that there would be no legal repercussions as a result of the suspension of the  debt payments since the debts had not been anchored on national laws.

Youths issued an ultimatum on Thursday after petitioning Members of Parliament to declare the debt burden a national emergency.

The petition, filed under Article 119 of the Constitution, was presented during a high-level breakfast meeting convened by AIDS Healthcare Foundation (AHF) Kenya and civil society organisations in Nairobi.

They demanded parliamentary approval for all sovereign borrowing, statutory budget floors to protect health and education, and an automatic suspension of debt servicing during national emergencies.