Every financial year the Government borrows to finance the fiscal deficit set out in the Budget Policy Statement and to repay maturing debt. The Medium-Term Debt Management Strategy sets the borrowing mix that balances cost and risk.
The Government borrows from domestic and external sources. Domestically, it issues Treasury bills and bonds through the Central Bank of Kenya as fiscal agent. Externally, it raises loans (bilateral, multilateral or syndicated) and issues international sovereign bonds.
Domestic borrowing
Treasury bills
Short-term securities with tenors of 91, 182 and 364 days, issued every week on Thursday and settled on Monday. They are sold at a discount: investors pay less than the face value and receive the full amount at maturity.
Treasury bonds
Medium- to long-term securities, typically paying interest every six months until maturity. Issued monthly with tenors of 2, 5, 10, 15, 20 and 25 years. The Government also issues tax-exempt infrastructure bonds from time to time.
Private placements
Bonds sold to pre-selected investors such as banks and other financial institutions, mutual funds, insurance companies and pension funds.
M-Akiba retail bond
A retail bond issued through mobile phone platforms to promote financial inclusion. M-Akiba is being re-engineered for issuance through the e-Citizen platform and will be relaunched when that work is complete.
External borrowing
Eurobonds (international sovereign bonds)
Sold to investors mainly outside Kenya and listed on exchanges such as London, Luxembourg or Dublin, so disclosure follows those markets' rules. Interest is paid semi-annually, free of withholding, income or other taxes. Citi (UK) is the Government's fiscal agent. See Market Updates.
Multilateral loans
Concessional loans with long grace periods and maturities and low interest rates, focused on economic development and social welfare, from institutions such as the IMF, World Bank and African Development Bank.
Bilateral loans
Government-to-government borrowing under a country cooperation framework or a Memorandum of Understanding signed by the two countries.
Commercial loans
Market-based loans from commercial lenders, either for specific projects or for budget support.
Export credit agency loans
Loans arranged through a country's export credit agency and guaranteed or insured against export risk. Disbursements are linked to shipments of contracted goods, interest rates follow the OECD Consensus Guidelines, and maturities do not exceed 10 years.
Public Private Partnerships
Under the Public Private Partnership Act, 2021, Government entities can contract private companies to provide public services through long-term agreements. The private partner bears significant risk and management responsibility in return for user charges or availability payments from Government.
Lending to Government
Individuals and institutions that wish to invest in Government securities need a bank account with a Kenyan commercial bank and an investment account at the Central Bank of Kenya. To open one, collect and fill in a mandate card at the Central Bank or any of its branches. Investors can also buy through a commercial or investment bank acting as nominee, or through DhowCSD (opens in a new tab).
Auction rules
To lend to Government, an investor submits a bid stating the amount to invest and the interest rate. Bids must follow these rules:
- Investors in the diaspora may submit bids by email to primaryissues@centralbank.go.ke.
- Application forms can be downloaded from the Central Bank of Kenya website (opens in a new tab) and are available at the Financial Markets counter in the CBK banking hall, CBK branches and centres.
- Manual bids must use these forms. Fully completed and signed forms go into the tender boxes marked "Treasury Bills/Treasury Bonds" in the banking hall during the sale period stated in the advertisement. CBK enquiries: +254 20 286 0000.
See also Why Does the Government Borrow? and the Annual Borrowing Plan.