Controller of Budget Calls for Tighter Loan Planning After Kenya Pays Sh20 Billion on Unused Funds

The Controller of Budget (CoB), Margaret Nyakang'o, has urged the government to implement stricter measures in loan planning and management following revelations that Kenya paid more than Sh20 billion in commitment fees on undrawn loans over the past 11 years.

Appearing before the National Assembly’s Public Debt and Privatisation Committee, Nyakang'o disclosed that between the 2015/16 and 2025/26 financial years, the Exchequer incurred Sh20.066 billion in fees for loan facilities whose funds were never accessed. These fees, charged by creditors on the undisbursed loan portions, averaged Sh1.824 billion annually during this period.

The highest payment was Sh3.232 billion in 2017/18, with a recent increase from Sh1.070 billion in 2024/25 to Sh1.267 billion in 2025/26, indicating persistent challenges in loan utilisation.

Nyakang'o highlighted that the Sh1.267 billion paid in commitment fees in 2025/26 alone could have funded primary school capitation for approximately 627,000 pupils at the current rate of Sh2,020 per learner.

Kenya's Growing Debt Profile

The Controller updated the committee on Kenya’s debt status, noting that as of June 30, 2026, the country’s Public and Publicly Guaranteed Debt Stock reached Sh13.010 trillion, a 10.3% increase from the previous year.

External debt accounts for Sh5.685 trillion of this total, with multilateral lenders providing 54.6%, commercial creditors 27.1%, and bilateral lenders 17.1%. During the 2025/26 fiscal year, Sh764.80 billion was disbursed from external loans, leaving Sh1.277 trillion undisbursed.

Causes and Recommendations

Nyakang'o attributed the high commitment fees to loans being contracted before projects were adequately prepared, misalignment between financing timelines and project implementation capacity, and delays in procurement and loan condition compliance.

To address these issues, she proposed several measures:

• Enforce stronger project-readiness criteria before loan contracting to ensure project preparedness.
• Develop a joint monitoring dashboard managed by the National Treasury and implementing agencies to track loan facilities.
• Establish an early-warning system to identify loans at risk of remaining undrawn and accruing fees.
• Conduct periodic reviews of long-undrawn loans to determine if they should be restructured or cancelled.

Nyakang'o emphasized that commitment fees are not merely avoidable costs but indicators of inefficiencies in project planning and execution that require urgent attention.