🧨 Africa’s Debt Trap: When Interest Becomes the Budget - Kenya

Debt has always worn a suit of irony—designed to bring growth, it often ends up choking the very system it sought to elevate. Kenya, like several of its African peers, now finds itself not merely servicing debt, but practically hosting it as the guest of honour at the fiscal dinner table. A recent UNCTAD report has put it plainly: Africa’s most vulnerable economies are not just paying interest—they’re bleeding revenue into it.

Let’s crunch the numbers and add some flavour to the crisis.

🔍 Debt Is Eating the Budget—Literally

According to Kenya’s Treasury, interest payments on public debt hit a jaw-dropping KSh 840.7 billion in the fiscal year ending June 2024—accounting for 31.1% of total revenues (KSh 2.702 trillion). That’s nearly one-third of all the money the government collected.

This would be fine if Kenya had spare cash. It doesn’t. In fact, the Kenya Revenue Authority missed its target by KSh 250 billion, collecting KSh 2.26 trillion against a KSh 2.51 trillion target. That shortfall means more borrowing—yes, to service debt. Debt to pay debt. Welcome to the fiscal ouroboros.

📉 Healthcare, Education... Who Needs Them?

As the UN Conference on Trade and Development warns, this “rapid increase in interest payments” is constraining spending in other critical areas—notably healthcare and education. When almost a third of your revenue vanishes into loan interest, building schools and equipping hospitals becomes an Olympic-level budgeting feat.

The Treasury is already shifting the fiscal goalposts—lowering its 2025/26 revenue estimates while banking on aid inflows. The implication? Fewer resources for citizens. More worry for policymakers. And an even bigger headache for future taxpayers.

📊 The Red Line We’re Crossing

Behold, the debt trap in full technicolour: This chart from UNCTAD’s World of Debt Report 2025 tells a loud and uncomfortable story. Since 2010, Kenya’s share of revenue spent on interest has tripled, rising from 9.5% to 29.3%. Angola, slightly worse off at 30.1%, and Ghana, though declining from a freakish 47.3% in 2022 to 25.4% now, still remain above the “red line” of sustainability.

This trend reveals not just poor fiscal choices, but also costly debt deals inked in years past—many during commodity booms and pandemics—whose bills are now due.

🪙 When the Interest Becomes the Principal Problem

Debt, when managed well, can be a powerful lever for development. But when a third of a nation’s income is used to just pay the interest? That’s a fire alarm, not a budgeting line item. It’s no longer about austerity or reform—it’s about fiscal survival. The challenge for Kenya and its peers is to stop the bleeding before interest payments become their entire economic story.

Tick tock. The red line is not just metaphorical anymore.