How Ksh129 Billion Debt for Food Swap Deal Will Work

Hello and welcome to the Money News Roundup Newsletter, where we are covering Kenya’s debt-for-food swap deal. We also cover the government’s admission of lacking data regarding the costs of educating a child in Kenya.

Kenya to Use Ksh129 Billion Debt-for-Food Swap to Repay Costly Eurobonds

The Treasury plans to use proceeds from a Ksh129 billion debt-for-food security swap to make early repayments on costly Eurobonds as part of efforts to ease Kenya’s growing debt burden. 

The Public Debt Management Office (PDMO) said the funds will be used to refinance expensive sovereign bonds maturing from 2031, replacing them with cheaper financing backed by a guarantee from the US International Development Finance Corporation (US-DFC).

As reported by the Business Daily, under the arrangement, Kenya will issue a new debt instrument at significantly lower interest rates, estimated below 3%, and use the proceeds to retire existing Eurobonds that currently pay between 6.08% and 8.8%.

The interest savings will then be channelled into programmes aimed at boosting food security.

Kenya’s outstanding Eurobonds stand at Ksh872.2 billion, with five of the seven bonds maturing between 2031 and 2048 identified as potential targets. Two bonds maturing in 2027 and 2028, worth Ksh72.4 billion, are excluded. Interest payments on Eurobonds are projected at Ksh84.73 billion in the year to June.

Treasury officials said early buybacks would help manage large future maturities, reduce refinancing risks and boost investor confidence. However, the specific bonds targeted will not be disclosed early to avoid market volatility.

Kenya’s public debt is close to 70 per cent of GDP, with annual debt repayments consuming nearly half of tax revenues. External debt repayments alone amount to Ksh597 billion this year, underscoring the urgency of innovative debt management strategies such as debt-for-food swaps.

Govt Secures Yuan to Service China’s SGR Loan

Kenya has secured enough Chinese yuan to service its yuan-denominated debt after converting three dollar loans from China into renminbi, easing pressure on its foreign exchange reserves. 

As reported by Bloomberg, the loans, used to construct a railway, now carry lower interest rates of about 3%, saving the government roughly over Ksh20 billion annually, compared to higher rates on the original dollar debt.

Raphael Owino, director general of the Public Debt Management Office, said the government faces no difficulty in generating the yuan and benefits from a four-year grace period to pay only interest, reducing debt service pressures. However, the exact amount of yuan secured was not detailed.

One loan retains a 2029 maturity, while the other two, initially due in 2034 and 2036, have been extended into the 2040s.

As of June 2024, Kenya owed 7.26 billion yuan. The loan swap, the first of its kind in Africa, sets a precedent for other emerging markets like Ethiopia, Zambia, and Sri Lanka, which are exploring yuan-denominated debt to lower borrowing costs and manage debt sustainability.

Govt Admits It Lacks Data on True Cost of Educating a Child

The government has admitted it lacks an exact figure for the cost of educating a child from primary school through university, raising concerns in Parliament about education budgeting. 

Education CS Julius Ogamba said the ministry is collecting data through the Kenya Education Management Information System (KEMIS) to track all support per learner, including capitation and bursaries. 

MPs criticised the admission, questioning how budgets are set without unit costs.

Ogamba said current capitation rates are based on a taskforce report. Based on the taskforce, the recommended capitation for primary schools was Ksh1,420 for primary, Ksh15,042 for junior secondary, and Ksh22,244 for senior secondary schools.

He also revealed a Ksh48.3 billion shortfall in the 2025/26 financial year. Primary schools face a Ksh2.7 billion gap, junior secondary Ksh20.8 billion, and senior secondary Ksh24.8 billion. 

As reported by Eastleigh Voice, MPs also faulted the ministry over illegal school levies burdening parents.

NSSF’s Investments in Eurobond Hit Ksh34.3B

The National Social Security Fund (NSSF) increased its Eurobond investments to Ksh34.3 billion in the year to June 2025, up from Ksh7.17 billion, as it accelerated portfolio diversification.

The 378.3 per cent jump was the fastest among its asset classes, outpacing offshore and private equity investments. 

Total assets rose to Ksh575 billion from Ksh402.2 billion, driven by higher member contributions following the implementation of the NSSF Act 2013.

Remittances increased to Ksh81.9 billion, with monthly contributions rising to Ksh4,320 in February 2025, and further increases are planned. 

The Eurobond exposure, begun in 2024, offers dollar-based returns and hedges against shilling depreciation. Local government bonds remain the largest holding at Ksh355.4 billion. Read more

Moody’s Upgrades Kenya’s Credit Rating, Easing Near-Term Debt Default Fears

Moody’s has upgraded Kenya’s credit rating to B3 from Caa1 with a stable outlook, easing fears of a near-term debt default. 

As reported by Citizen Digital, the agency cited higher foreign exchange reserves of about Ksh1.5 trillion ($12.3 billion), a narrower current account deficit, a more stable shilling, and Kenya’s return to international bond markets. 

Stronger domestic borrowing also reduced reliance on foreign lenders.

However, Kenya remains in the speculative category, with high debt costs, weak revenue collection, and large deficits. 

While the upgrade boosts investor confidence and offers cautious optimism for the Kenyans, long-term gains depend on better debt management and sustainable revenue growth.

Meanwhile, as reported by the Kenyan Wall Street, the government has announced plans to roll out an automated external debt payment platform under the Treasury Single Account, integrating Treasury, CBK and IFMIS systems to streamline approvals, improve accountability, and ensure timely servicing of external obligations.

Matatu Operators Announce Nationwide Strike Over Insecurity

Transport operators have warned of a nationwide road shutdown starting Monday, threatening major disruption in towns and highways over what they term the government’s failure to guarantee security for road users and investors.

As reported by Capital Business, Inter-Corridor Mobility Chairman Joseph Kagai cited rising cases of vehicle torching, extortion and harassment of drivers by criminal gangs and some boda boda riders.

Kagai said operators plan to block major towns, cities and roundabouts, arguing that roads are funded through fuel levies paid by motorists, giving them the right to demand protection.

 He accused authorities of inaction despite repeated complaints and no visible arrests.

The lobby urged urgent security deployment, dismantling of extortion networks and dialogue to avert transport paralysis that could disrupt trade, commuter movement, and food and fuel supply.

Govt to Use Tourism Levy to Repay Investors Funding the Bomas Project

Kenya has ring-fenced a portion of the over Ksh5 billion collected annually from the tourism levy to partly repay private investors in hotels and commercial facilities for the Bomas International Convention Complex (BICC). 

As reported by the Business Daily, at least 4% of levy collections will service long-term repayments to investors in the hospitality and commercial components, boosting Nairobi’s position as a regional conferencing hub.

The 79-acre BICC project, costing over Ksh30 billion, includes an 11,000-seater convention centre, two hotels, and a shopping mall, developed under a public-private partnership on a “plan, design, finance, construct, operate and transfer” model.

 The first phase, funded by an off-budget loan from Afreximbank, is over 60% complete, with completion expected by June next year.

Tourism Fund chair Samson Some said committing levy revenues improves project bankability, mobilises private capital quickly, and delivers infrastructure faster than conventional public financing. 

Notably, the government plans to extend the imposition of the levy to Kenyans who own Airbnbs and short-term rentals.

Unit Trust Assets Set to Hit Ksh1 Trillion as Investors Open Multiple Accounts

Investments inunit trusts are set to hit Ksh1 trillion in the first half of 2026, driven by multiple accounts opened by individual investors seeking higher returns. 

Assets under management reached Ksh679.6 billion in September 2025, up from Ksh596.3 billion in June, with investor numbers rising to 2.95 million from 2.46 million.

Money market funds (MMFs) dominate with Ksh400 billion or 58.9% of assets, followed by special funds at Ksh137.8 billion (20.3%), fixed income funds at Ksh105.6 billion (20.1%), equity funds at Ksh3.3 billion (0.5%), and balanced funds at Ksh1.69 billion (0.2%).

FMA Chairman Nicholas Ithondeka noted younger investors prefer unit trusts over bank accounts, with returns and low risk driving multiple account openings. CMA had licensed 41 schemes by September 2025, led by Sanlam with a 19.2% market share. Read more

Kenya Ranked 4th in ‘Wash Wash’ in Africa

Kenya ranked 4th in Africa for cross-border crimes in 2025, with a criminality score of 7.18, up from 6.14 in 2019, according to the ENACT Organised Crime Index. It leads East Africa, behind DRC (7.47), South Africa (7.43), and Nigeria (7.32). 

The ranking reflects the country’s role as a regional transport and financial hub, which criminal networks exploit for heroin trafficking, human smuggling, cybercrime, and financial crimes.

Heroin routes through Mombasa, digital attacks, credit card fraud, and unregulated hawaladars highlight Kenya’s vulnerability. Cyber and financial crimes score 8/10, showing their entrenchment. Criminals exploit ports, highways, and warehousing used by legitimate trade. 

The ENACT Index evaluates criminality and resilience, emphasising that Kenya’s growing illicit markets coexist with its formal economy, creating high-value opportunities for organised networks. Read more