KENYA'S DEBT PROBLEM IS NOW COMPETING DIRECTLY WITH THE PRIVATE SECTOR FOR BANK MONEY

Kenyan commercial banks are increasingly putting deposits into government securities rather than expanding lending to businesses and households.

That should worry every Kenyan entrepreneur.

Government securities are attractive to banks because they offer relatively predictable returns with far less credit risk than lending to struggling businesses.

The result?

Government gets the money. Businesses struggle to access affordable credit.

Kenya's public debt has now crossed the **KSh13 trillion** mark, while the government continues to rely heavily on domestic borrowing.

For the 2026/27 financial year, Treasury's borrowing plan places heavy emphasis on domestic financing, with around KSh1 trillion expected from the local market.

Think about what that means.

Every shilling that banks put into Treasury bills and bonds is a shilling that could potentially have financed:

🏪 A small business
🏭 A manufacturer
🌾 A farmer
🏠 A mortgage
💻 A technology startup
👨🏾‍💼 A young entrepreneur

This is the danger of crowding out.

The government can borrow heavily because it has the power to tax and repay. A small business doesn't have that luxury.

And when government debt offers banks an attractive risk-adjusted return, why take the risk of lending to a struggling SME?

Kenya therefore faces a bigger question than simply "How much debt do we have?"

The question is:

How much private-sector growth are we sacrificing to finance government borrowing?

We need an economy where banks are financing businesses, innovation, manufacturing, housing and jobs—not an economy where the safest business for banks is simply lending to the government.

Government borrowing should finance productive development, not crowd out the people who are supposed to create the next generation of Kenyan jobs.

#Kenya #KenyaDebt #Economy #Banks #SMEs #Jobs #Kenya2026