Kenya’s Loan Clock: Ticking at Sh23.83 Million Per Hour for 4 Months Straight.

Kenya’s been on a bit of a borrowing binge lately—like that friend who maxes out their credit card but swears it’s all for a good cause. Between September and December 2024, the government snapped up a whopping Sh68.7 billion in loans. That’s Sh23.83 million every hour, or roughly Sh397,292 every single minute. To put it in perspective, that’s like buying a luxury car every 60 seconds for four months straight.

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So, where’s all this cash coming from? Well, Kenya’s been cozying up to both bilateral lenders and commercial creditors. Three of the loans are in euros, courtesy of some friendly European nations, while the other 15 are in Chinese yuan, thanks to the China Development Bank (CDB). The euro loans come with pretty sweet interest rates—some as low as 0.25% annually—but the CDB loans? Not so much. Those come with a 4% interest rate and a 0.5% upfront fee.

Now, you might be wondering, “What’s all this money for?” Good question! Some of it’s going toward stabilizing the economy and tackling climate change (shoutout to Italy for the Sh20.3 billion loan to reduce greenhouse gases). Germany chipped in Sh8.1 billion to help Kenya transition to a greener, more inclusive economy—basically, they’re helping Kenya “go green” without the awkward phase of reusable straws and tote bags. France, on the other hand, is funding a cyber-resilient National System Control Centre for the electricity grid.

But wait, there’s more! The CDB loans are all about infrastructure. Roads, roads, and more roads. From the Barpello-Tot-Sigor-Marich Pass road to upgrades in Kisii, Nyamira, and Uasin Gishu counties, it’s like Kenya’s playing a giant game of SimCity with borrowed money. Even Taita Taveta County is getting in on the action with a Sh1.1 billion loan to improve the Cess-Rekeke-Lake Jipe road. Basically, if you’ve ever complained about potholes, your prayers are being answered—just not for free.

Of course, all this borrowing has raised some eyebrows. Kenya’s public debt has already crossed the Sh12 trillion mark, and with revenue collection still sluggish, some folks are side-eyeing the government’s spending habits. The Treasury insists it’s all under control, though, promising to hit a debt-to-GDP ratio of 55% by 2029. For now, though, that number’s sitting at a cozy 62%. So, while Kenya’s building roads and fighting climate change, it’s also juggling a pretty hefty IOU. Let’s just hope the payoff is worth it—otherwise, it’s going to be a very expensive game of catch-up.

Here’s what it means for you:

1. To repay these loans, the government will likely need to increase revenue. This could mean higher taxes for individuals and businesses in the future. Essentially, you’ll be paying for these projects, even if you didn’t directly benefit from them.
2. If a large portion of government revenue goes towards debt repayment, there might be less money available for other essential public services like healthcare, education, and social programs. This could mean reduced quality or availability of these services.
3. On the flip side, if the borrowed funds are invested wisely in infrastructure projects that boost economic activity like the roads, it could lead to long-term economic growth. This growth could create jobs and improve living standards, eventually offsetting the costs of the loans. However, this is dependent on the projects being successful and well-managed.

Source; National Treasury Report presented to Parliament.

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