Kenyan state corporations have significantly increased their commercial borrowing outside government guarantees, rising by 38.2 percent to Sh62 billion in the year to June 2026. This increase exposes the Treasury to growing contingent risks if the firms fail to repay their lenders. The stock of non-guaranteed debt grew by Sh17.1 billion in the period, adding to the Sh44.9 billion recorded in June 2025.
The National Treasury's latest annual debt management report highlights the growing debt load by state firms outside explicit sovereign guarantees. The report notes that this increase "warrants enhanced monitoring given that such borrowing, although not explicitly guaranteed by the government, may present contingent fiscal risks" when state-controlled companies experience difficulties servicing their obligations.
Five entities hold 81.9 percent of all non-guaranteed debt, meaning financial challenges at a handful of firms could expose the government to high costs. The National Cereals and Produce Board (NCPB) was the largest borrower at Sh13.94 billion, with a fertiliser loan owed to KCB Bank Kenya, equivalent to 22.5 percent of the total as of the end of June 2026.
Other major borrowers include Kenya Electricity Generating Company (KenGen), which owed Sh9.77 billion, including Sh9.32 billion borrowed from Absa Bank and Sh443 million from the French development-finance institution Agence Française de Développement (AFD). Kenya Airports Authority (KAA) owed Sh9.65 billion, comprising loans from the World Bank and AFD.
The concentration of non-guaranteed debt is significant in energy and infrastructure-related entities, with energy and petroleum companies accounting for Sh19.59 billion or 31.6 percent of the total exposure. This includes KenGen, Kenya Power Company, the Geothermal Development Company, and the National Oil Corporation of Kenya (Nock).
Roads and transport entities accounted for another Sh17.83 billion, or 28.7 percent, largely through KAA and Kenya Ports Authority (KPA), while agriculture accounted for Sh15.34 billion, equivalent to 24.7 percent. The report lists NCBA Bank Kenya as the lender to Kenya Power, while the Geothermal Development Company borrowed from Co-operative Bank.
Public and publicly guaranteed debt stood at Sh13.12 trillion at the end of June 2026, equivalent to 70.4 percent of GDP. The Treasury's growing exposure to state firms' debt highlights the need for enhanced monitoring and risk management to mitigate potential fiscal risks.
Key points
- State corporations increased commercial borrowing outside government guarantees by 38.2 percent to Sh62 billion.
- Five entities hold 81.9 percent of all non-guaranteed debt, posing significant fiscal risks.
- Energy and infrastructure-related entities account for a significant portion of non-guaranteed debt.
