According to the latest Central Bank of Kenya (CBK) Weekly Bulletin, Banks continue to be the largest domestic creditors to the government, holding 46.2% of the total domestic debts of Kshs 4.7 trillion.
Pension funds are the second largest creditor to the Government, contributing 33.1% of the total domestic debt, equivalent to Kshs 1.6 trillion. Insurance companies and Parastatals account for 7.4% and 6.7% of total domestic debt, respectively, equivalent to Kshs 345.8 billion and 282.9 billion, respectively.
Lending to the government has become an attractive investment, yielding higher returns than other asset classes. The current lowest-yielding government security is the 91-day Treasury, with a yield of 12.0% p.a.
This has seen pension funds, Banks, Insurance companies, and parastatals increase their lending to the government in the first half of the year by Kshs 90.9 billion, Kshs 88.8 billion, Kshs 16.1 billion, and Kshs 11.8 billion, respectively.
The government closed FY 2022–2023 at 34.3% above its domestic borrowing target of Kshs 428.3 bn with a net borrowing position of Kshs 568.7 bn, an indication of investors’ preference for government securities.
Treasury bonds account for 84.9% of the total domestic debt, with Treasury bills, Overdrafts from the Central Bank, and other domestic debts accounting for 13.0%, 1.6%, and 0.5%, respectively.
