World Bank urges Kenya to use some infrastructure fund money to pay off expensive debt
Public debt is about 70% of GDP and interest takes a third of revenue, the bank says. The fund already holds Sh103.5bn from the Kenya Pipeline sale.
Nairobi — The World Bank has advised Kenya to use part of the money raised for its new National Infrastructure Fund to retire some of its most expensive debt.
In the 34th edition of its Kenya Economic Update, the bank said Kenya remains at high risk of debt distress. Public debt reached 69.9% of GDP at the end of the 2025/26 financial year, and domestic borrowing now makes up 56.2% of the total. Central Bank of Kenya data show total public debt at Sh13.5 trillion in August: Sh7.7 trillion domestic and Sh5.8 trillion external.
A third of revenue on interest
"Public debt reached about 70% of GDP in the middle of this year while interest payment absorbed about one third of government revenue. That means there is less resources available for essential services and development priorities," said Dr Qimiao Fan, a World Bank division director. The bank said heavy domestic borrowing had raised interest costs and refinancing risks and could limit credit to the private sector.
The infrastructure fund
The government is selling stakes in state-owned companies to build a Sh5 trillion fund for infrastructure. It has already put in Sh103.5 billion from selling its 65% stake in Kenya Pipeline Company, and Sh204 billion from the sale of a 15% stake in Safaricom is expected to follow.
"While directing privatization proceeds to infrastructure could help address Kenya's infrastructure gap, allocating part of the proceeds to retire high-cost debt could reduce interest costs, lower refinancing risks, and strengthen debt sustainability," the bank said.
Source: KBC, November 2026.
