On 24th December 2023, President William Ruto promised a plan for the Kenyan government to commence borrowing from its citizens’ savings instead of depending on costly external loans.
Inasmuch as domestic debt composition in Kenya is higher than foreign debt composition, several concerns have been raised. The Central Bank restricts domestic debt access to banks, insurance companies, pension funds, and high-net-worth individuals, most of whom profit using the public’s own deposits and premiums. This entrenches wealth inequality and limits citizen investment in government securities. There is also a concern that interest earned on domestic debts is usually significantly higher than in foreign debts.
In 2026, the government seeks to increase expenditure from Sh 262 billion to Sh 4.5 trillion and plans to domestically borrow its way through the budget. The government is targeting 80 per cent of its borrowing from domestic banks, which will, predictably, further lock out loans to small businesses and individuals and restrict economic growth for most. Criticism has arisen since throughout this borrowing there is still lack of debt transparency and fiscal reform.
