Kenya set to raise Sh370 billion with first-ever debt-for-food swap
The arrangement will allow Kenya to channel resources into agricultural projects, irrigation, food storage infrastructure, and nutrition programmes, helping address hunger while lowering debt pressure.
Kenya is planning to raise about Sh370 billion from external sources in the current financial year as it seeks to ease reliance on expensive borrowing and embrace new financing models.
At the heart of this plan is the country’s first-ever debt-for-food swap worth $1 billion (Sh130 billion) with the World Food Program (WFP), which will convert part of the national debt into investments in food security.
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The arrangement will allow Kenya to channel resources into agricultural projects, irrigation, food storage infrastructure, and nutrition programmes, helping address hunger while lowering debt pressure.
Discussions with the WFP are ongoing, with the aim of transforming part of the country’s obligations into food-focused initiatives.
The United Nations Food and Agriculture Organisation estimates that over 3.4 million Kenyans face acute food shortages due to climate shocks, population growth, and limited access to modern farming.
Authorities expect the debt-for-food model to ease fiscal stress while responding to one of the country’s biggest social challenges.
Kenya’s debt is currently at 67 per cent of GDP, with the overall stock standing at Sh12.1 trillion.
Since President William Ruto took office, the government has added Sh3.5 trillion in new loans, raising the per capita debt burden to about Sh208,000, nearly double the average of Sh106,000 ten years ago.
The International Monetary Fund already places Kenya in the category of countries at high risk of debt distress.
The Treasury’s borrowing plan for 2025–26 also includes raising Sh130 billion from a privately placed bond in the United Arab Emirates, where Kenya already tapped Sh65 billion last year.
The financing carries an interest rate of 8.25 per cent and is structured for repayment in tranches between 2032 and 2036.
“We can use it partly for liability management, partly for budgetary support, or exclusively for budgetary support,” National Treasury Cabinet Secretary John Mbadi told journalists earlier.
He explained that $900 million (Sh116 billion) of the UAE bond will go toward buying back a Eurobond maturing in 2027, while the balance will be used to clear syndicated loans due this year.
Other elements of the plan include $500 million (Sh64 billion) through sustainability-linked bonds by March 2026, a $757 million (Sh98 billion) World Bank loan expected by March 2026, and another $457 million (Sh59 billion) loan in June of the same year. Kenya also intends to reduce its debt costs by turning to securitised debt and by converting a $5 billion (Sh647 billion) rail loan into the Chinese currency.
Additionally, the government plans to issue a Samurai Bond worth Sh22.1 billion, denominated in Japanese Yen, before the end of December 2025.
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