NAIROBI, Kenya – The government is grappling with a mounting debt crisis, with several state corporations and agencies failing to repay loans amounting to Sh1.197 trillion.
This significant debt burden raises serious concerns about the long-term sustainability of these institutions and whether taxpayers will ever see a return on these substantial investments.
According to the National Treasury’s latest report, out of Sh1.26 trillion disbursed to these entities, only Sh64.5 billion — about 5% — has been repaid, highlighting a worrying trend of non-repayment.
At the top of the list is the Kenya Railways Corporation (KRC), which owes a staggering Sh737.5 billion.
Despite being a key player in Kenya’s transportation infrastructure, KRC has made no repayments on its debt.
Similarly, Kenya Airways, another loss-making entity, owes Sh99.9 billion, with no repayments made so far.
Together, these two entities account for nearly 70% of the total outstanding loans, and there is no clear repayment plan in sight.
The government’s continued support of these companies, without tangible progress on repayment, has sparked concerns among economists and citizens alike.
Abraham Rugo, executive director of the International Budget Partnership-Kenya, expressed skepticism about the prospects for repayment, given the poor performance of many state-run enterprises.
“A lot of these institutions are not performing, and it’s hard to see how these loans will ever be paid off,” Rugo stated.
The energy sector, too, is a major contributor to this crisis.
KenGen, the country’s largest power generator, owes Sh78.6 billion, while Kenya Power has an outstanding debt of Sh71.3 billion.
Both companies have been plagued by chronic financial struggles, relying on government bailouts to stay afloat.
Water agencies are also among the worst offenders. The Athi Water Works Development Agency, for example, owes Sh55.1 billion, and other water-related entities owe millions more, compounding the debt problem across various sectors.
Despite these alarming figures, questions remain about why these entities have been allowed to operate with impunity, especially when it comes to recovering these debts.
Auditor General Nancy Gathungu has highlighted systemic negligence in debt recovery, pointing out that some of the entities continue to perform poorly and still require frequent bailouts.
“The non-repayment of these loans has resulted in them being written off as bad debts, costing the government and taxpayers valuable resources,” Gathungu stated in a recent audit report. “This raises concerns about mismanagement and inefficiency in state corporations.”
The agricultural sector also features prominently in the list of defaulters, with companies like Agro-Chemical & Food Company Ltd owing Sh2.9 billion, and Mumias Sugar Company and Kenya Meat Commission failing to repay millions of shillings.
These entities have long been plagued by inefficiency, yet continue to receive government loans.
The financial woes also extend to public universities, with Kenyatta University owing Sh10.8 billion and Moi University Sh231 million.
Similarly, the Kenya Urban Transport project has an outstanding Sh40.7 million, adding to the long list of public institutions struggling with debt.
Notably, several defunct companies, such as Uchumi Supermarkets and Kenya Farmers Association, owe significant sums but are no longer operational.
Despite this, they still carry the burden of unpaid loans, further adding to the taxpayer’s load.
“These entities have not only failed to meet their financial obligations but have also failed to provide adequate transparency regarding the management of public funds,” Gathungu added.
The government’s failure to hold defaulters accountable has compounded the financial challenges facing the country, especially as it struggles to fund essential services like healthcare, education, and infrastructure.
The inability to recover funds from these state-owned companies exacerbates the problem and raises doubts about the future sustainability of Kenya’s public sector.
