By Benadeta Mwaura - Reporter
Kenya, 21 November 2025 - A recent Auditor‑General report reveals that the Treasury raised KSh 2.97 trillion in domestic bonds between 2018 and 2023, only to funnel KSh 2.67 trillion of that into day-to-day government operations, not infrastructure projects.
This means that more than 90% of the money, meant for development, ended up in recurrent spending.
The revelation has sparked alarm across the country: questions are being asked about debt sustainability, investor confidence, and public accountability. And in online spaces, like Reddit and X, the distrust is real.
What the Audit Found
Of the KSh 2.97 trillion raised in domestic bonds, KSh 2.67 trillion was deposited into the Consolidated Fund Services (CFS) account, without being tied to any specific development project.
A further KSh 558.87 billion was used to repay maturing domestic debt, while KSh 2.1 trillion was released to various ministries, departments, and agencies, primarily for recurrent expenses.
Disturbingly, KSh 300 billion could not be clearly accounted for, as the audit trail failed to trace its final destination.
Most critically, the Treasury currently has no mechanism to ring-fence bond proceeds for the infrastructure projects for which they were originally raised, raising concerns over accountability and the effective use of public funds.
Why The Risks Are Deep
Debt SustainabilityCritics argue that using bond proceeds for routine spending could undermine public finance stability. The Auditor‑General warns this approach violates the spirit, and possibly the letter, of Kenya’s Public Finance Management Act, which intends borrowing to fund development, not just recurrent expenditure.
Investor ConfidenceIf bondholders suspect that proceeds are not going into tangible projects, trust in government securities may wane. The auditor’s findings could erode confidence, especially among domestic and international investors who bought bonds assuming they would fund large-scale development.
Interest BurdenKenya’s debt service cost is already straining its budget. The government paid Sh 632.3 billion in interest for domestic debt in the 2024–25 fiscal year, a figure that underscores just how expensive this heavy reliance on local borrowing has become
Credit RiskRating agencies like Moody’s are watching closely. High domestic debt, fueled by borrowing that doesn’t go into revenue‑generating projects, could undermine Kenya’s credit profile.
What Kenyans on Social Media Are Saying
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In public forums, suspicion is growing. On Reddit, one user posted:
“Loans are toxic and should be discouraged … There is no need of taking loans as they always plunge individuals and even nations into poverty. Loans end up benefitting foreigners than hardworking Kenyans.”
Another added bluntly:
“There is no clear trace … where this interest is coming from… no project so far that can be clearly identified … to produce such interest yields.”
These comments echo a powerful narrative: ordinary Kenyans are asking whether the government is borrowing for real growth, or simply borrowing to pay for its own expenses.
What Can Be Done, A Way Forward
Ring-Fence Bond ProceedsThere must be a legal or operational framework to ensure that money raised through infrastructure bonds is actually used for infrastructure. Without such safeguards, accountability risks becoming nothing more than a myth.
Improve TransparencyThe Treasury and oversight institutions, including the Auditor General, should publish detailed reports and use dashboard tools that allow citizens to track exactly how every shilling raised is spent.
Rethink Debt StrategyKenya needs to rebalance its approach to borrowing. Instead of accumulating short-term domestic debt, the government should explore more sustainable financing models, including foreign borrowing tied specifically to infrastructure projects and refinancing options for maturing bonds.
Strengthen Debt ManagementUsing borrowed funds for recurrent spending is a slippery slope. The government should reinforce its debt management office, improve financial forecasting, and limit the use of borrowing for non-productive expenses.
The Auditor‑General’s report on Kenya’s domestic borrowing is more than a financial footnote, it’s a red alert. When bond proceeds meant to fuel growth end up in everyday spending, the country’s debt becomes not just heavy, but hollow.
For Kenyans wondering where the money is going, and for investors hoping for a stable future, the message is clear: accountability isn’t just nice to have. It’s foundational.
