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Piling debt: Each Kenyan now living on Sh100, 000 borrowed means

By Patrick Alushula | February 23rd 2018
By Patrick Alushula | February 23rd 2018

It was Benjamin Franklin, a renowned polymath and one of the founding fathers of the US, who said: “Rather go to bed supperless, than rise in debt.”

But Kenyan parents and parents-to-be today wake up drenched in a fresh debt of Sh203 billion ($2 billion), thanks to the Jubilee administration's rising appetite for borrowing. And future generations have not been spared.

Data by the Central Bank of Kenya had as at December last year put the Government's internal debt at Sh2.22 trillion, while the external debt stood at Sh2.35 trillion.

The soaking in of fresh debt from international lenders pushes that above Sh4.8 trillion. Assuming the population is 48 million people, every Kenyan owes the lenders Sh100,000.

When a Kenyan asked on social media if this is good or bad news, he got a hilarious response.

“I guess it is evening news,” replied one Linus Ombede.

That is just one of many days Kenyans have woken up to the news that the Government has borrowed more money. In fact, the National Treasury opened the New Year with news the administration had borrowed a new expensive loan to repay an old one. 

On Wednesday, Auditor General Edward Ouko, who has the task of tracking how each shilling is used, waded into the discourse while addressing public accountants.

Ouko said: "The jury is still out there, with one group convinced there is no reason for alarm while another calling on the Government to trim its appetite for fresh debt."

He added: “The last group is raising the alarm to the extent of saying we have already passed the critical point. As professionals, let us interrogate the numbers and raise our voices of reason about our debt.”

Going by a June 2015 report from CBK, only 1.1 million personal bank accounts were holding at least Sh100,000. This means even at gunpoint, if each Kenyan was tasked to pay their loan, just a handful would escape the bullet.

When former President Mwai Kibaki left power in 2013, each Kenyan owed the world an average of Sh43,900. His predecessor, Daniel Moi, left power with each Kenyan having a debt of Sh19,000.

The justification for more debt has always been to finance development projects. This is even as accountability questions increase.


From a debt of Sh1.79 trillion in March 2013, yesterday’s confirmation of the latest Eurobond means the debt has tripled in less than six years. On average, every year since 2013, the Government has needed a debt of Sh630 billion to run.

A further breakdown shows that the Government borrowed an average of Sh62.7 billion a month last year, compared to Sh54 billion in 2016 and Sh55 billion in 2015.

Domestic debt has hit Sh2.22 trillion, from Sh982 billion in 2013, when President Kenyatta took power.

On external debt, China has increased its influence through projects such as the SGR. In March 2017, the external debt was Sh812.7 billion.

The 2017 Budget Review and Outlook for 2018/2019 shows that the financing gap in Kenya’s next budget will rise again.

Kenya's debt-to-GDP ratio is expected to rise to 59 per cent in 2018/2019, up from 56.6 per cent. In 2013, the ratio was at 39.8 per cent. A rising debt-to-GDP ratio means the economy produces and sells goods and services that are not sufficient to pay debts without incurring further debt.

The Institute of Certified Public Accountants of Kenya says a ratio of 56.6 per cent means the rate of revenue growth is less than the level of borrowing. This means the Government will use much of what it generates to service debts. About Sh1 trillion of Kenya's debt will mature in the next 12 months, it notes.

Debate on how well the country has utilised the money it has been borrowing continue to rise and has divided the country.

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