A recent report has identified Kenya as one of Africa’s highly indebted countries, with its debt-to-GDP ratio recorded at 65.6% in 2026. This figure surpasses the 60% benchmark commonly used to assess debt sustainability, sparking concerns about Kenya’s growing debt burden and escalating loan servicing costs.

Kenya’s Debt Position in Africa

The Africa Debt Story 2026 report places Kenya among 23 African nations exceeding the 60% debt-to-GDP threshold. It ranks Kenya sixth in terms of public debt stock, with an estimated $79.3 billion (about KSh10.2 trillion), representing 4.33% of the continent’s total public debt.

Leading the list is Egypt with $348.34 billion, followed by South Africa at $305.57 billion, Algeria ($122.40 billion), Morocco ($108.79 billion), and Nigeria ($99.26 billion). Sudan, with a debt-to-GDP ratio of 272%, is Africa’s most indebted country, followed by Zambia and Cabo Verde.

Debt Servicing Pressures

The report highlights that Kenya, alongside Ghana, allocates approximately 26% of its GDP to interest payments, illustrating the increasing strain of debt servicing on government finances. This limits fiscal space for essential development and social programs.

Kenya’s public debt has recently surpassed KSh12 trillion, with expectations of further borrowing in the 2026/27 fiscal year. The government projects a budget deficit of about KSh1.1 trillion, nearly 90% of which will be financed through domestic borrowing.

Risks of Domestic Borrowing

Economists warn that heavy domestic borrowing may crowd out private sector credit, pushing up interest rates and hampering economic growth by limiting funds available to businesses and households.

Broader African Debt Trends

  • Africa’s external debt rose from $435.88 billion in 2010 to $1.17 trillion in 2024, growing at an annual rate of 6.8%.
  • Domestic debt increased even faster, from $211.23 billion in 2010 to $660.5 billion in 2024, with a 7.9% annual growth rate.
  • The continent’s average debt-to-GDP ratio climbed from 39% in 2010 to 65% in 2024, driven by infrastructure investment, fiscal deficits, and emergency pandemic borrowing.

While a debt-to-GDP ratio above 60% does not immediately indicate a crisis, the report cautions that sustained high debt levels reduce fiscal flexibility and constrain funding for critical public services such as healthcare and education.

Kenya’s rising debt and growing interest obligations are expected to remain key issues in economic policy discussions going forward.