President William Ruto’s Kenya Kwanza administration procured Sh572 million every day within four months in 18 new loans to finance various projects across the country, according to a National Treasury document tabled in the National Assembly.
The document shows that the cumulative Sh68.7 billion loans were procured between September 1, 2024 and December 31, 2024, from bilateral and commercial creditors.
Of the loans, three are Euro (EUR) denominated and were procured from three bilateral lenders with 15 others, Chinese Yuan (CNY) denominated, sourced from China Development Bank (CDB).
A breakdown of the loan amount translates to a borrowing craze of Sh17.2 billion a month, Sh572.1 million a day, Sh23.83 million an hour and Sh397,292 a minute.
While the annual interest rate on the bilateral loans will be paid in Euro and ranges between 0.25 percent and 1.23 percent, some attract an annual commitment fee of 0.5 percent and an upfront fee of 0.25 percent of the commitment.
All the commercial loans from CDB to be repaid in CNY, attract an annual interest rate of 4 percent and an upfront fee of 0.5 percent of the available facility.
Section 31 (3) of the Public Finance Management (PFM) Act requires the National Treasury Cabinet Secretary to update Parliament on the loans procured by the government.
“At the end of every four months, the Cabinet Secretary shall submit a report to parliament stating the loan balances brought forward, carried down, drawings and amortisations on new loans obtained from outside Kenya or denominated in foreign currency,” the law states.
The hunger for loans comes as concerns grow over the sustainability of the country’s public debt that stands north of Sh12 trillion amid depressed revenue streams as well as the continued harsh forex regime against the Kenyan shilling.
Details from the National Treasury show that Kenya’s debt stock is against debt service obligation for the 2024/25 financial year which stands at Sh1.85 trillion and includes debt retention at Sh843.4 billion and interest payment at Sh1.1 trillion.
In October 2023, Parliament passed an amendment to the PFM Act replacing the Sh10 trillion public debt numerical ceiling with a debt anchor set at 55 percent of the GDP in net present terms.
This is though projected to be achieved by 2029 with the current situation being about 62 percent of the GDP.
The PFM Act also requires the National Treasury Cabinet Secretary while presenting the report on the loans procured, to state the names and parties to the loan, the loan amount and the currency in which it is expressed and in which currency it is repayable.
The details should also include the terms and conditions of the loan, including interest and other charges and terms of repayment, the amount of the loan advanced at the time the report is submitted and the purpose for which the loan was used and the perceived benefits of the loan.
The projects to be financed under the EUR denominated billions include the National System Control Centre (NSCC) of the electricity grid, Kenya Reform Financing and budgetary support.
For instance, the Sh20.3 billion from Italy is meant to support Kenya’s budget to stabilise the economy with reduced greenhouse gas emissions and Kenya’s achievement of its climate targets through institutional reforms.
It is also meant to finance government programmes that relate to or are connected with any policy actions regarding transportation, forest and land use and climate finance.
The amount will be paid in 13 years from 2032 to 2045 and attracts an interest rate of 1.23 percent a year.
“The commitment fee is 0.25 percent per annum on the available commitment and an upfront fee of 0.25 percent of the commitment,” the National Treasury says of the loan.
The Kenya Reform Financing has Sh8.1 billion from the German government to finance “reform-oriented expenditures of the Kenyan budget.”
“This is to promote the transition to a more resilient, greener and more inclusive economy in line with the Bottom-Up Economic Transformation Agenda,” the National Treasury document says.
The loan will be repaid in Euro within 13 years from 2029 to 2054 and attracts an interest rate of 1.2 percent per year with a commitment fee of 0.25 percent a year on undisbursed loan amounts.
Sh4.6 billion from the French Republic to be paid in Euro is meant for the construction of a stable NSCC “that is also resilient to physical and cyber security challenges.”
The loan will be repaid within 15 years from mid-July 2030 to mid-January 2045 at an interest rate of 0.8 percent computed on disbursed and not yet repaid amounts.
The construction of Barpello- Tot- Sigor- Marich pass (B17) road, Tot junction Chesegon- Kopasi River has the financing of Sh4.6 billion from CDB to be repaid in four years ending 2031.
Several roads projects in Kisii and Nyamira counties have the financing of Sh3.61 billion from CDB to be repaid from 2027 to 2031.
Upgrading to bitumen standard and performance-based routine maintenance of Kinyach- Arror- Kapsowar road has Sh3.45 billion from CDB to be repaid in four years from 2027 to 2031 and Sh3.92 billion for various road projects in Uasin Gishu County.
The Sh2.6 billion from CDB is for the upgrading to bitumen standard and performance-based routine maintenance of Timboroa- Meteitei- Kopere, Ainapng’etuny JNC- Ainapng’etuny Secondary- AIC Tindiret Primary School, Setek JNC- Setek dispensary and access to public institutions in Nandi County. The repayment period is four years from 2027.
The upgrading to bitumen standard and maintenance of Kiambu-Raini, JNCT, Kaspat road, Nduota, Gathanga, Kiguaro, Karuri High School, Gachie, Kabuku and Loop road in Kiambu County, has the financing of Sh2.3 billion.
The loan will be repaid in four years from 2027 to 2031 including the Sh2.2 billion for the road projects in Embu.
There is also the upgrading to bitumen standard and performance-based routine maintenance of Tawa-Nguluni road at Sh1.9 billion from CDB to be repaid in four years from 2027.
At least Sh1.6 billion is for the upgrading and maintenance of road projects that include Ichamara- Thangathi- Rutune- Kariru- Kimathi/ Mihuti- Rutune- Maseno- River Sagana- Githuani- A2 Kariti roads.
Nyandarua County has several road projects financed to the tune of Sh1.5 billion from CDB to be repaid in four years from 2027.
The Sh1.2 billion procured from CDB is meant for various road projects in Kiambu and will be repaid in four years from 2027 to 2031.
The Sh1.1 billion from CDB is for phase 1 spot improvement of Cess (Nghonji) Rekeke Lake Jipe road in Taita County.
It will be repaid in CNY within four years from 2027 to 2031. As is the case with all loans procured from CNY, this one also attracts an interest rate of 4 percent and an upfront fee of 0.5 percent of the available facility.
