Kenya’s Debt: The Political Question That Can No Longer Be Avoided.
Kenya’s next presidential election will be dominated by familiar political questions. Candidates will talk about jobs, the cost of living, healthcare, education, agriculture, housing, infrastructure and the future of young people. Political alliances will be negotiated, regional interests will be mobilised and competing visions of the country’s future will be presented to voters. Yet beneath almost every major promise made during an election campaign lies a less comfortable question: where will the money come from?
That question brings Kenya’s public debt directly into the centre of the political debate.
Public debt is often presented as a technical subject, discussed through economic terminology that can make it seem distant from ordinary citizens. Debt-to-GDP ratios, fiscal deficits, domestic securities, external obligations, interest payments and debt sustainability assessments may appear to belong to Treasury offices and international financial institutions rather than to ordinary Kenyan households. But this perception is misleading. Public debt affects the amount of money government has available for public services, the taxes citizens pay, the cost of borrowing for businesses, the government’s ability to respond to economic crises and the choices available to future administrations.
Kenya’s debt has reached a scale that makes it impossible to treat the subject as a secondary economic issue. According to the National Treasury, Kenya’s public and publicly guaranteed debt stood at approximately KSh11.814 trillion by June 2025, equivalent to 67.8 per cent of GDP. Treasury’s debt strategy continues to identify debt distress as a significant fiscal risk, while the International Monetary Fund has classified Kenya as being at high risk of debt distress.
These figures should fundamentally change the quality of Kenya’s political conversation. The question is no longer simply whether the government should borrow. Governments around the world borrow, and responsible borrowing can support economic development. The more important question is whether Kenya is borrowing at a pace, cost and purpose that strengthens the economy sufficiently to meet the obligations being created.
That distinction is critical.
Borrowing Is Not the Problem; Unproductive Borrowing Is
There is nothing inherently irresponsible about government borrowing. A developing country may need substantial capital to build roads, energy infrastructure, water systems, hospitals, schools, irrigation networks and other assets that can improve productivity over many years. Borrowing can therefore allow a country to bring forward investments that would otherwise take decades to finance from annual tax revenues.
The problem begins when borrowed money fails to generate equivalent economic and social value.
A loan used to construct productive infrastructure that reduces transport costs, expands trade and creates employment is fundamentally different from money lost through inflated procurement, abandoned projects, politically motivated investments or expenditure that does little to increase the country’s productive capacity. In the first case, borrowing can contribute to future growth. In the second, the country is left with the obligation to repay without receiving sufficient value in return.
This is why the next presidential election should not be reduced to an argument between politicians who claim that borrowing is necessary and others who claim that all borrowing is dangerous. Both positions are too simplistic.
The serious question is: What exactly is Kenya borrowing for, and what are Kenyans receiving in return?
Every major borrowing programme should be examined in terms of its cost, maturity, interest rate, expected economic return and social benefit. Projects financed through debt should have credible feasibility studies and transparent procurement processes. Their progress should be publicly monitored, and their outcomes should be measurable.
The Kenyan taxpayer deserves to know not merely how much was borrowed, but what was achieved with the money.
The Debt Bill Eventually Reaches the Taxpayer
The connection between debt and taxation is one of the most important issues that voters need to understand.
Government revenue comes primarily from taxpayers and other public income. When expenditure exceeds available revenue, government has to finance the gap through borrowing or other means. Borrowing may solve an immediate financing problem, but it creates future obligations in the form of principal and interest payments.
This creates a difficult political relationship between today’s spending and tomorrow’s taxation.
For the 2026/27 financial year, Kenya has budgeted approximately KSh1.66 trillion for public debt-related costs. That figure illustrates the scale of the financial obligations accumulated over previous years.
The political significance of this is substantial. Government revenue is not unlimited. The more revenue committed to servicing existing debt, the less fiscal flexibility remains for new priorities. A future administration may therefore enter office with ambitious plans but discover that a significant portion of the national budget has already been committed to obligations inherited from previous governments.
This is why the debt debate cannot be separated from the debate over taxation.
A presidential candidate promising to reduce taxes must explain what expenditure will be reduced, what alternative revenue will replace the lost income, or how economic growth will generate sufficient additional revenue. A candidate promising extensive new government programmes must similarly explain how those programmes will be financed.
Kenya cannot permanently sustain the politics of promising more government services while simultaneously promising substantially lower taxation without confronting the arithmetic.
At some point, the numbers have to add up.
Domestic Debt and the Private Economy
Another important dimension of Kenya’s debt problem is domestic borrowing. When government borrows heavily from the domestic financial system, it competes for available capital with businesses and households. This can affect the availability and cost of credit, particularly for businesses that need financing to expand.
Kenya’s economic future depends heavily on the ability of the private sector to invest, employ people and increase production. A manufacturer seeking financing for new machinery, a farmer investing in irrigation, or an entrepreneur attempting to establish a new business needs access to reasonably priced capital.
The IMF has repeatedly highlighted the high cost of domestic borrowing as one of the challenges facing Kenya. This creates an important policy question for the next government: is public borrowing supporting economic growth, or is it competing with the private sector for the capital needed to create that growth?
A government cannot solve unemployment simply by expanding public expenditure if its borrowing policies simultaneously make it more expensive for private businesses to invest and create jobs. The answer must therefore involve a better balance between public investment and private-sector development.
The Foreign-Currency Risk
Kenya’s external debt presents another vulnerability because foreign-currency obligations expose the country to exchange-rate movements.
When the shilling loses value against the dollar or another currency in which Kenya has borrowed, the amount required to service that debt increases in shilling terms. This means that debt management is connected to Kenya’s ability to generate foreign exchange through exports, tourism, remittances, foreign investment and other international economic activities.
This is an important reason why debt cannot be considered separately from production.
A country that consistently imports more than it exports and relies heavily on external financing remains vulnerable to movements in global financial markets and currency markets. Kenya’s long-term debt strategy must therefore be connected to an economic strategy capable of expanding exports, strengthening manufacturing, improving agricultural productivity and developing internationally competitive services.
The country cannot simply manage its debt better while leaving its productive base unchanged.
The Accountability Problem
There is another question that should be at the heart of the political discussion: how effectively is borrowed money monitored?
The public should be able to trace major borrowing from the original agreement to the project or programme it financed. Citizens should know the amount borrowed, the terms of the loan, the intended use of the money, the implementing institution and the results achieved.
This is particularly important because debt creates an obligation that extends beyond the life of a particular administration.
If a government borrows billions and a project fails, the debt does not disappear when the project fails. The taxpayer remains responsible.
This creates a strong argument for greater transparency and accountability in public procurement and debt-financed projects. Major projects should undergo credible cost-benefit analysis before borrowing is undertaken. Contract variations should be scrutinised. Delayed or abandoned projects should be investigated. Where public funds have been lost through negligence, corruption or deliberate misconduct, accountability should follow.
The issue is not simply corruption in the traditional sense. It is the broader question of whether the Kenyan state receives adequate value for every shilling it commits.
When that shilling is borrowed, the standard should be even higher.
Debt and the Next Generation
Public debt also raises an important question of intergenerational responsibility.
The people who make borrowing decisions today are not necessarily the people who will bear their full consequences. A loan taken today may continue to be serviced by governments several years or even decades later.
There is nothing inherently unfair about future generations paying for infrastructure that they will use. A major road, energy system or water project can legitimately be financed over a long period if its benefits also extend into the future.
The injustice occurs when future taxpayers inherit financial obligations without inheriting equivalent economic assets or opportunities.
That is why the next generation should be at the centre of Kenya’s debt debate.
Young Kenyans will inherit the country’s debt, but they will also inherit the economy that today’s borrowing creates. If borrowing finances productive investments, they may inherit a stronger economy. If borrowing primarily finances consumption, waste or inefficient government, they may inherit a heavier tax burden and fewer opportunities.
The question therefore is not simply how much debt Kenya has.
It is what kind of country that debt is creating.
The Presidential Test Should Change
The next presidential election provides an opportunity to change the standard by which political promises are judged.
Every presidential candidate should be expected to publish a clear fiscal and debt strategy alongside their manifesto. That strategy should state how much the candidate intends to borrow, what the borrowing will finance, how existing debt will be managed, what taxes will be increased or reduced, which expenditures will be cut and what debt level the administration expects to leave behind.
Candidates should also be required to cost their major campaign promises.
If a candidate proposes a major infrastructure programme, voters should know its estimated cost and financing mechanism. If another proposes substantial tax reductions, voters should know how the resulting revenue gap will be addressed. If another promises significant increases in public employment or government services, voters should know the effect on the recurrent budget.
This would represent a major improvement in Kenya’s political culture.
A manifesto should not merely describe what a candidate wants to do. It should demonstrate that the candidate understands what the country can afford to do.
Debt Should Be an Election Issue for Every Kenyan
Public debt deserves to become one of the defining political issues of Kenya’s next election because it influences almost every other major national concern.
It affects taxation because government needs revenue to service its obligations. It affects public services because debt payments compete with other demands on the national budget. It affects businesses through domestic interest rates and access to credit. It affects the currency and external stability through foreign-currency obligations. It affects development because borrowing determines how much infrastructure can be financed and at what cost.
Most importantly, it affects the freedom of future governments to make choices.
A country carrying manageable debt has greater flexibility to respond to economic shocks, invest in emerging opportunities and support citizens during difficult periods. A country under severe fiscal pressure has fewer options. Its government may be forced to prioritise debt payments, increase taxation, reduce expenditure or seek additional financing when circumstances are least favourable.
That is why Kenya’s debt question is ultimately a question of governance.
The next presidential election should not be a competition over who can make the largest promises. It should be a competition over who has the most credible plan for building an economy capable of financing those promises.
Kenyans should ask every candidate a simple but demanding question: How much will your government borrow, what will you do with the money, how will you repay it, and what will Kenya have to show for it?
The answer should matter as much as any political alliance or campaign slogan.
Kenya cannot choose its economic future responsibly without confronting its financial reality. The country needs leaders who understand that borrowing is not free money, that development has a cost, that taxes have limits and that every government inherits obligations from those that came before it.
The next president will inherit the authority to govern Kenya. But they will also inherit its balance sheet.
The electorate deserves to know what they intend to do with both.