Sh776.6 million a day: How Kenya borrowed Sh95.5 billion in just 4 months

The government signed new loans equivalent to borrowing over Sh776 million every single day for four months this year, according to a new report from the National Treasury. 

The report, which details all new debt contracted between May 1st and August 31st, 2025, reveals that four major loans were signed, totalling a staggering Sh95.5 billion.

While the loans are intended to fund everything from green energy to agricultural programs, a deeper analysis shows that the vast majority of the funds, over two-thirds of the total amount, are not for new development projects. 

Instead, the single largest loan is a high-interest commercial bond taken to manage existing government debt and support the national budget.

The Breakdown: Where is the Money Going?

The Sh95.5 billion was acquired through four separate agreements with a mix of commercial, bilateral, and multilateral lenders.

The largest and most expensive of these is a USD 500 million (Sh64.6 billion) International Sovereign Bond issued by Citigroup Global Markets Europe AG. 

This loan comes with a high fixed interest rate of 8.25% per annum and is explicitly intended to "carry out liability management operations and support the budget". 

Repayment will be made in two large instalments in 2030 and 2032.

The other three loans carry lower interest rates and are tied to specific development goals:

Sh16.4 billion (USD 126.8 million) from the International Fund for Agriculture Development. 

This loan is for an Integrated Natural Resources Management Programme aimed at improving livelihoods and climate resilience for vulnerable groups, including women and youth.

The interest rate is 1.41% with a 1.39% service charge.

Sh9.2 billion from the Organisation of Petroleum Exporting Countries (OPEC)

This loan will support the "Economic Inclusion and Green Recovery Support Program," which aims to improve the efficiency of public spending and enhance budget transparency. 

It has a variable interest rate tied to the Euribor benchmark. Euribor is short for Euro Interbank Offered Rate. The Euribor rates are based on the interest rates at which a panel of European banks borrow funds from one another.

Sh5.3 billion from the German Government

These funds are earmarked to finance the redevelopment of the 8.6 MW Gogo Hydropower Plant, contributing to the country's renewable energy capacity. The loan has a fixed interest rate of 2.98% per annum.

As of May 2025, Kenya's total public debt stood at Sh11.5 trillion. This represents a 10.3% increase from the Sh10.4 trillion recorded in May 2024.

The total debt is composed of both domestic and external borrowing.

• Domestic Debt: As of May 2025, Kenya's domestic debt was Sh6.2 trillion.

• External Debt: During the same period, external debt stood at Sh5.3 trillion.

Ultimately, the Sh95.5 billion borrowed in these four months tells a tale of two Kenyas.

On one hand, the government is successfully securing low-interest development loans for crucial long-term projects in energy and agriculture. 

On the other, it is simultaneously taking on high-cost commercial debt to cover immediate budgetary gaps. 

The critical question for policymakers is whether the short-term stability offered by the Sh64.6 billion bond is worth the long-term financial drag of its 8.25% interest rate, a cost that will linger long after the initial relief has faded.