Kenya’s debt crisis did not emerge overnight. In my view, one of the most consequential policy changes was the 2014 amendment to the Public Finance Management Act, particularly Section 50(7)(d), which opened the door for pre-negotiated borrowing expenses to be paid directly at the closing of external loans.
“…applied, in part, to pay at closing, pre-negotiated expenses associated solely and exhaustively with the borrowing, including but not limited to, the fees, commissions and expenses of lenders, financial arrangers, managers and book runners…”
This provision entrenched a debt brokerage ecosystem around sovereign borrowing. It deserves urgent review and repeal if Kenya is serious about restoring transparency and accountability in public debt management.
Kenya’s public debt has risen from approximately KSh 1.79 trillion (about US$14 billion) in 2014 to nearly KSh 13 trillion (about US$100 billion) today. While many factors contributed to this growth, ending the brokerage model is, in my view, one of the fastest structural reforms we can make.
The fastest way to begin solving Kenya’s debt problem is to stop the brokerage business.
