Kenya has raised USD 1.5 billion (about KSh 194 billion) from international investors through a new Eurobond. The National Treasury says part of the money will repay USD 1 billion from a maturing 2028 Eurobond ahead of time.
The new bond has two parts — a seven-year note priced at 7.875 per cent and a 12-year note at 8.8 per cent. Treasury Principal Secretary Dr Chris Kiptoo says this will help the government spread out debt repayments and manage refinancing risks.
Officials celebrated the bond’s success after it was oversubscribed nearly five times. They called it proof of investor confidence in Kenya’s economy.
However, many economists are not celebrating. They warn that while the deal reduces short-term pressure, it adds to Kenya’s total debt. In simple terms, the government is borrowing new money to repay old loans — not to build infrastructure or create jobs.
“It’s like borrowing from Peter to pay Paul,” one financial analyst said. “We are not investing; we are refinancing.”
Analysts also say investors are not showing faith in Kenya’s growth. Instead, they are taking advantage of high returns. “Those financiers in London and New York are not betting on Kenya’s prosperity; they are betting on Kenya’s pain,” one expert said. Kenya is paying about 7.8 per cent interest — much higher than what rich countries pay.
Expensive confidence
Treasury officials say the Eurobond shows strong market confidence. But critics call it a sign of dependence on costly foreign debt. The interest rates remain among the highest in Kenya’s history, showing that lenders still see the country as risky.
“We are celebrating being overcharged,” another analyst said. “We pay five to fifty times what rich countries pay, just to stay afloat.”
Kenya has run budget deficits every year since 2013. The law says borrowed money should fund development projects, not government operations. Yet much of Kenya’s borrowing now pays salaries, repays old loans, and covers daily expenses.
This pattern has real effects. Universities have closed due to unpaid lecturers. Hospitals face staff strikes and drug shortages. Schools are struggling with funding cuts. Foreign investors get paid on time — but citizens and public services often wait.
Debt Delayed, Not Solved
The Treasury says money not used for debt repayment will support the national budget. But experts warn that this only delays Kenya’s debt problems. Without reforms to raise revenue and reduce waste, the country risks being trapped in endless refinancing.
Each time debt pressures rise, the International Monetary Fund (IMF) steps in with loans and strict conditions — higher taxes, fewer subsidies, and limited public hiring. These measures often hurt ordinary Kenyans more than they help.
The 2024 Gen Z protests showed growing anger at this situation. Young people protested not just against new taxes but against a system that keeps borrowing heavily while living standards stagnate.
Economists say Kenya must learn to use debt productively — to grow the economy and create jobs, not to fund recurrent spending.
This new Eurobond may give Kenya breathing space. But it also shows how deep the debt hole has become. The government continues to pay foreign creditors on time — even as it falls behind on promises to its own people.
In the eyes of global investors, Kenya remains creditworthy. But in the eyes of its citizens, the country is still deeply in debt — financially, socially, and morally.
