Soaring Public Debt, Missing Accountability, Brewing Mistrust and Economic Injustice in Kenya’s Political Economy

The article argues that absence of political will to align accountability mechanisms within debt governance frameworks is the central reason debt decisions escape oversight, public trust in institutions erode and economic injustice is perpetuated.

The political elites' desire to escape accountability while devouring the national cake, whether prepared from the sweat of the masses or borrowed from external sources, had started soon after nationalist leaders assumed oversight of the independent states. As Fanon observed, 

There exists inside the new regime, however, an inequality in the acquisition of wealth and monopolization. Some have a double source of income and demonstrate that they are specialized in opportunism. Privileges multiply and corruption triumphs, while morality declines. Today the vultures are too numerous and too voracious in proposition to the lean spoils of the national wealth.^[1]

“The people stagnate deplorably in unbearable poverty; slowly they awaken to the unutterable treason of their leaders.”^[2]

This prophecy in Frantz Fanon’s 1963 The Wretched of the Earth, mirrors Kenya’s and Africa’s political Economy space today.  The betrayal by the elite and public suffering is a lived reality of modern debt architecture. The deliberate structural choice by “comprador” elite to prioritize foreign creditors over the citizens is a dynamic built into global financial systems^[3]. The system operates through a “revolving door” where the elites use opaque instruments to convert public debt into private offshore wealth.^[4]

With Kenya’s public debt standing at 13,467.52 billion shillings (103.59 billion USD) at end of August 2026, with external and domestic debt stock taking up 31.1% and 41.2% of the GDP respectively,^[5] its misappropriation has caused citizens to repay loans that did not fully benefit them.

The high debt at the centre of the crisis including but not limited to changing climatic conditions, tough economic recovery from the Covid-19 pandemic and geopolitical confrontations requires that the government stop the routine bypass of public scrutiny on debt agreements and ringfence social spending against rigid creditors’ demands^[6] to strengthen support for those at the lower cadre of the economy. 

The UN Kenya Common Country Analysis (CCA) 2025 report indicates that even as the economy grew steadily, inequality, exclusion and poverty remain entrenched with poverty in the urban areas going up and arid counties twice as poor as the rest of the country.^[7] The National Treasury warned on the economic costs of climate-related disasters through the Disaster Risk Financing Strategy 2026-2030. Its highlights that 187.82 billion shillings (1.45 billion USD) in losses and damages caused by 2023 and 2024 floods show climate disasters are becoming a major threat to Kenya’s fiscal stability and long-term economic growth.^[8] Proper public debt management therefore would create a fiscal space to support in rebuilding and investing in resilience, and protecting the vulnerable.

Historically, nations borrowed to handle crises and for growth^[9] but for Kenya and the wider African region, loans are borrowed, misused and accountability evaded, perpetuating disparity. This is a result of a systematic failure built into Bretton Woods rules that protect the lenders at the expense of the borrower nations.^[10]

Now, the Constitution of Kenya (2010) and the Public Finance Management Act 2012, revised in 2025, stipulates the process of acquiring and managing the public debt. However, The Bretton Woods Agreement Act (1963)^[11] has been the weak link as it allows the government to borrow directly from the International Monetary Fund and World Bank bypassing the parliament, an institution representing people’s voices. 

This misalignment in Kenya’s debt governance contributes to the misappropriation as audit reports indicate flawed process followed in borrowing, and mismanagement of large portions of the public debt. 

Corruption has shown to begin from the acquisition stage of the loans extending to the implementation of projects funded by the same loans. Looking at 39 commercial loans borrowed between July 2010 to December 2021, 26/39 failed to follow the right procedure of borrowing, according to the Auditor-General’s 2022 Special audit report.^[12] The report exposes major gaps in the utilization of loans in Kenya but for it to drive accountability and action, it should go further to link the misuse to specific projects and officials, and recommend strong enforcement.

As for about 2 billion USD Eurobond utilization, proceeds could not be traced to specific projects,^[13] while the Auditor General could not trace the repayment and spending records of about 151.4 million USD from World Bank for reconstruction and development channelled into Kenya Mortgage Refinance Company (KMRC).^[14] 

These examples give a glimpse of a shared failure: the governing elite exploit systematic loopholes to misappropriate funds, while the creditors continue lending and demanding repayments. The IMF warned that Kenya’s debt to the Fund and other multilaterals may rise to 62% of the total external debt by 2035.^[15] The repayment of IMF loans by Kenya poses risks to the country’s medium-term financial stability due to already high external debt servicing making accountability of public debt more crucial. 

External lenders like the World Bank often give prerequisite conditions to the disbursement of loans. Its latest disbursement of 750 million USD for Kenya - Second Kenya Fiscal Sustainability and Resilient Growth Development Policy Operation^[16] - had 10 prior actions that Kenya needed to meet first: mandating pooling public funds by treasury into single account; gazetting conflict of interest regulations; gazetting social protection regulation to keep welfare proof of inflation; gazetting county licensing regulations to standardize local business fees;  submitting a competition bill to parliament to break monopolies; gazetting TVET regulations to standardize vocational training; approving the Shirika plan and gazetting rules for refugees SIM cards; adopting a national urban transport policy; enacting a forest conservation act to regulate natural resources, and approving a sovereign sustainability linked finance framework for new debt. ^[17]

While conditions such as establishing a Treasury single account, enforcing conflict of interest regulations and protecting cash transfers for the vulnerable are great, the conditions must always be scrutinized to ensure that those that do not align to the needs of the country are not bundled along. The World Bank overreaches by dictating micro policies on forestry, urban transport and TVET, while pushing new climate related debt traps. The Bank hands over a strict checklist and Kenya eagerly accepts it. The demands are then used to evade accountability, and in the end, the creditor gets the rules, the leaders get the cash and the citizens get the bill!

Kenya’s Office of the Attorney General often gives recommendations in its audit reports on the utilization of public debt and performance of projects funded by it. However, low implementation of these recommendations leads to wastage, stalled projects, economic injustice and erosion of public trust. Kenyans too have upped their game on oversight with the help of social media as it has improved mobilization.

Corruption in the management of public debt even with efforts from different stakeholders indicates the lack of political will and integrity to enforce accountability in public debt management. Debt is treated as a political resource rather than a development tool. These reasons form part of the fuel for continued public mistrust and protests against the government.

Public mistrust played out clearly on 4th July 2026 when Deputy President Kithure Kindiki highlighted that the cooperatives will be supported to invest in infrastructure once the National Infrastructure Fund takes over. This was interpreted to mean that the government was planning to tap into an approximately 7.73 billion USD treasure sitting in the Sacco Societies Regulatory Authority’s (SASRA’s) regulated Savings and Credit Cooperative Societies (SACCOs) to fund infrastructure. Cooperatives are member owned, democratically controlled organizations that pool resources to empower the members. On the other hand, the National Infrastructure Fund is a state Fund created in 2026 to mobilize long term capital to build major infrastructure to reduce reliance on public debt. They are strictly separate and by law the government has no access to SACCOs deposits. 

Had members of saccos and cooperatives withdrawn their savings due to the uncertainty of the security of their savings, economic injustice could have deepened. Low-and middle-income households would have been stripped of affordable financial services. Now, the question is not whether the citizens should fund development: it is whether the government can be trusted.

As the concept of odious debt continues to be contested in different arenas, discussions bring it out as a fairness principle where debts incurred without the citizens’ consent or benefit are deemed illegitimate. There are several solutions to whether Kenya should boycott odious debt, advocate for its restructuring or continue paying as it stands:

• Invalidating the Bretton Woods Agreement Act (1963) through the court so that borrowing is governed by the Kenyan Constitution (2010) and the Public Finance Management Act (2012). The move by Busia Senator Okiya Omtatah (with allied activists Bernard Muchiri and Naomi Misati) to challenge the Bretton Woods Agreement Act (1963) in court^[18] puts the country in the right direction. 

• Choosing leaders who can ensure that guidelines provided by the Kenyan Constitution (2010) and the Public Finance Management Act (2012) on public finance governance are followed to the letter. This is possible with leaders who embody the values of the country, and believe in the constitution and its implementation. It starts at the ballot. Kenya plans to go into general election in August 2027 as provided by the 2010 Constitution. It is a chance every five years to put the right people at the helm of leadership who carry with them the aspirations of the citizens, embody the rule of law and values that uphold the right to the foundation of everyday life. 

• Auditing debts and taking those responsible for wastage into account even as Kenya charts a way into clearing the debt. These would ensure the rising public debt is tamed, public trust is regained and the citizens would be able to drink from the gourd of accountable borrowing and shared prosperity.

Esther Cheburet is a financial inclusion, gender equality, poverty reduction and participatory governance enthusiast based in Kenya. Her interests lie in accountability in state finance and the interconnection between fiscal decisions and social equity. She embodies the values of Pan-Africanism with a vision of accountable governance and equitable development.

Endnotes