Kenya engaged in a massive borrowing spree over the past five months, tapping 11 new loans worth over KES 223 billion as revealed in a Treasury report tabled in Parliament.
The report covers new loans signed between 1 September 2023 and 31 January 2024. It was tabled in line with legal requirements for the Cabinet Secretary to update Parliament on loan agreements every six months.
The vast majority of the loans – 10 out of 11 – were from multilateral lenders including the World Bank, African Development Bank and East African Development Bank. The World Bank provided three loans through its IDA arm worth KES 36.99 billion, KES 28.58 billion, and KES 17.08 billion.
The KES 36.99 billion IDA loan has a 40 year tenure, with repayment starting in March 2029 all the way to September 2053. It carries a 1.25% interest rate along with a 0.75% service charge and 0.5% commitment fee. According to the Treasury, the funds will go towards budgetary support.
The second IDA loan worth KES 28.58 billion will be repaid over 43 years starting October 2028. It has the same interest and charge rates and will be used to finance development projects and reforms.
The third IDA loan amounting to KES 17.08 billion will also be repaid over 41 years beginning November 2028. This loan will help finance Kenya’s arid and semi-arid lands economic development program.
Other key loans include KES 14.29 billion from the European Investment Bank and KES 10 billion from the African Development Bank to support road infrastructure and agriculture respectively.
However, the most notable loan was the KES 30.63 billion from the Trade and Development Bank (TDB) to refinance the June 2014 Eurobond maturity that was repaid last year. This expensive commercial loan carried interest rates of SOFR plus 6.75% to 8% – significantly higher than concessional rates.
The borrowing spree points to the country’s insatiable debt appetite even as over 60% of revenues go towards debt repayments.
