Leading lawyer Willis Otieno has issued a policy warning on Kenya’s rising public debt, urging a shift in discourse from the size of the debt stock to the quality of expenditure it finances.
In a statement released on Thursday, Otieno framed debt as a fiscal instrument that can either accelerate development or jeopardise future prosperity, depending on how it is deployed.
“Debt is a tool. Used well, it accelerates development. Used poorly, it mortgages the future,” Otieno said, laying out a nuanced critique of current borrowing patterns.
His argument comes amid heightened parliamentary and public scrutiny over Kenya’s debt trajectory, which has climbed past KSh 12 trillion and is projected to continue rising under the 2026/27 budget framework.
Otieno noted that when governments borrow, they pull future tax revenue into the present, essentially betting that today’s investments will yield stronger economic returns tomorrow.
“Infrastructure that boosts productivity, energy projects that lower business costs, logistics systems that expand trade, and education investments that enhance human capital” are among the types of capital spending he said can justify debt.
However, Otieno said the problem deepens “when debt finances consumption, political patronage, bloated administrative budgets, or opaque projects with inflated costs. Then it ceases to be development finance and becomes an intergenerational transfer of incompetence.”
The lawyer’s critique centres on Kenya’s fiscal structure, where a growing share of borrowed funds services recurrent obligations such as salaries, operational costs and interest payments, rather than building long‑term productive assets. Analysts say this trend erodes fiscal space and weakens economic resilience.
“When borrowing increasingly supports recurrent obligations, the fiscal architecture begins to cannibalise itself,” Otieno said, warning of limited future capacity to sustain public services or respond to economic shocks.
A notable part of his statement highlights concerns over rising domestic borrowing, which he said crowds out private sector credit. With government securities offering near‑risk‑free returns, commercial lenders may prefer these instruments over financing local businesses — potentially stifling entrepreneurship and employment growth.
“The deeper issue is not merely the size of Kenya’s debt stock. It is the quality of expenditure,” Otieno said, stressing the need for transparent and economically productive borrowing.
Economists acknowledge the point, noting that domestic credit crowding out is a recognised risk when governments tap local markets aggressively. This dynamic can raise borrowing costs for the private sector and slow investment.
Otieno also cautioned against equating Kenya’s borrowing with that of global powers.
“The global examples often cited in defence of borrowing — whether the United States or China — overlook a crucial detail: those economies borrow within systems of high productivity, deep capital markets and export strength,” he said. “Debt in a weak‑growth environment behaves differently. It compounds vulnerability.”
Transparency emerged as another major theme in Otieno’s statement. He criticised the use of complex instruments, syndicated loans, and Public‑Private Partnerships (PPPs) that can obscure contingent liabilities.
These future obligations, if poorly disclosed, risk understating the government’s true exposure and complicating fiscal planning.
“When repayment obligations are hidden in future revenue guarantees or minimum return clauses, official debt figures will understate true exposure,” he said, urging stricter reporting standards and public scrutiny.
Parliament and the National Treasury are currently engaging stakeholders on the 2026/27 budget and Medium‑Term Debt Management Strategy.
Otieno’s remarks add to intensifying calls for a borrowing strategy that prioritises productive investments and strengthens economic fundamentals.