By Treezer Michelle Atieno
Kenya's escalating debt crisis is exacerbating the high cost of living, putting
immense pressure on ordinary citizens. According to a report by Debt Justice, the
country will allocate 26.1% of its domestic revenue to repay external loans, the
eighth-highest percentage in Africa.
The report "Between Life and Debt" highlights that Kenya's external debt payments
have surged from an average of 6% of government revenue between 2008 and
2016 to 26% this year. Nearly half of Kenya's external debt payments between
2023 and 2025 are to private creditors, primarily bondholders, due to their high
interest rates and short maturities. Additionally, about a quarter of the payments
are to China, with the remainder owed to multilateral lenders and other
governments.
As debt repayments rise, public spending has plummeted. Between 2017 and
2022, public spending per person, excluding interest payments, fell by 15%. By
2025, it is projected to be 7% less than in 2017. According to the National
Taxpayers Association, this decline in public expenditure is evident in the lack of
essential services in health and education facilities.
Reduced public spending has led to shortages of medicines and specialized
equipment in hospitals and delays in government disbursements to schools and
social protection programs. Despite these challenges, the government continues to
borrow more to service existing debts, creating a vicious cycle of debt dependency.
In February 2024, Kenya borrowed $1.5 billion through a new bond at 10.375%
interest. The high-interest payments, amounting to $155 million annually, further
restrict the government's ability to invest in crucial public services.
Public dissatisfaction with the government's handling of the debt crisis has sparked
frequent protests. President William Ruto has responded by appointing an
independent task force to conduct a comprehensive public debt audit. The task
force is expected to report its findings within three months.
Kenya's debt crisis mirrors a broader trend across Africa, where many countries
spend more on interest payments than on health or education. The International
Monetary Fund (IMF) has warned that external debt payments exceeding 14-23%
of government revenue lead to severe financial strain. Kenya's situation, with 26.1%
of revenue dedicated to debt repayment, vividly illustrates this struggle.
Without effective debt restructuring or outright cancellation, Kenya's financial woes
are set to persist, further straining public services and exacerbating the high cost of
living for its citizens. The ongoing crisis underscores the urgent need for a global
economic system that addresses the inequalities developing nations face.
