Kenya trapped in debt cycle as Ksh.7 of every Ksh.10 goes to repayment - Report

The Okoa Uchumi public debt report reveals Kenya’s dire economic situation, with Ksh.7 out of every Ksh.10 collected going to debt repayment.

Human rights groups are calling on the government to ban supplementary budgets, scrap NG-CDF, and fully disclose all loans, amounts, and creditors, highlighting how domestic borrowing mainly benefits wealthy lenders, transferring wealth from the poor to the rich.

With Kenyan debt now standing at Ksh.11.81 trillion, domestic debt is Ksh.6.3 trillion while external debt stands at Ksh.5.48 trillion.

The Okoa Uchumi public debt report released on Tuesday revealed Kenya’s dire economic situation, with half of the country’s revenue going to debt repayment.

For every Ksh.10 collected, Ksh.7 goes to debt, leaving only Ksh.3 for all other operations, which is also vulnerable to corruption.

“Kenya is already in a debt crisis. Domestic debt has overtaken foreign debt and is more prone to misuse. With external debt, we can track the funds, but for domestic debt, we cannot,” said Alexander Riithi, head of programs at TISA.

The domestic debt is now higher than foreign debt, making it harder to track and more likely to be misused. Foreign loans are under strict scrutiny by lenders, but domestic borrowing lacks such checks.

The report also shows how massive corruption affects ordinary Kenyans. About 30 per cent of the population is unemployed. Education is under strain, and the health sector has become a killing field where corruption decides who survives.

“About 30 per cent of our population is unemployed. We have an education system that hasn’t been tested. Kenyans are telling us the health sector has become a killing field, where you don’t know if you will survive tomorrow,” Riithi noted.

Leaders and citizens, through the report, recommend banning new World Bank and IMF loans, reforming NG-CDF, stopping unapproved supplementary budgets, and making all loans fully transparent.

“We need to get off the yoke of the World Bank and IMF. These institutions were created to rebuild Europe after the World War. How does that plan help Africa’s development? We must speak about it,” said Saboti MP Caleb Amisi.

“We urge the government to completely do away with supplementary budgets. Each one increases the fiscal gap with expenditures we did not approve. NG-CDF must also be reformed,” said Diana Gichengo, Executive Director of TISA.

They warn that failure to act will trap Kenya in a permanent debt crisis.