MWE Correspondent
The public debt crisis in East Africa is tightening its grip on national budgets, with fresh data showing that Kenya, Uganda, and Tanzania will collectively spend over Tsh60 trillion (approx. $23 billion) on debt servicing during the 2025/2026 financial year.
This growing debt burden is straining fiscal space across the region, undermining the ability of governments to fund vital public services such as education, healthcare, infrastructure, and job creation.
Kenya continues to bear the highest debt load in East Africa. According to its 2025/26 national budget, the government will allocate Ksh1.37 trillion (~Tsh27.4 trillion) to debt repayment—accounting for nearly 31% of the entire budget. This marks an 11% increase compared to the previous fiscal year.
The country’s public debt now stands at nearly Ksh10 trillion, sparking protests and public outcry. Earlier in 2024, the government faced nationwide protests over a controversial finance bill aimed at raising taxes to bridge budget gaps.
Much of Kenya’s borrowing has come from foreign lenders such as China, the International Monetary Fund (IMF), and international bond markets—many of which carry high interest rates.
Uganda’s 2025/26 budget allocates USh26 trillion (around Tsh18.3 trillion) to debt servicing—an eye-watering 36% of its total national budget of USh72 trillion. Analysts warn this severely limits the country’s ability to invest in human development and industrialization.
President Yoweri Museveni’s administration is investing heavily in infrastructure, including the East African Crude Oil Pipeline (EACOP) and a Standard Gauge Railway project. While these projects are expected to spur growth in the long term, they have required costly external borrowing.
According to the Bank of Uganda, the country’s public debt stock reached USh96 trillion by the end of 2024, raising questions about sustainability.
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Tanzania, under the leadership of President Samia Suluhu, has taken a more cautious approach to borrowing. The country plans to spend Tsh14.22 trillion—or 25.2% of its Tsh56.49 trillion 2025/26 budget—on debt servicing.
Despite a relatively lower debt-to-GDP ratio of about 47%, experts warn that rising interest payments and maturing loans could pressure the government to either cut spending or increase domestic borrowing.
The Ministry of Finance and Planning has signaled its commitment to maintaining macroeconomic stability while mobilizing local revenues. Meanwhile, Tanzania is gearing up for infrastructure development linked to the 2027 Africa Cup of Nations, which it will co-host with Uganda and Kenya.
A recent IMF regional report noted that many Sub-Saharan African countries now spend more on debt than on social protection or education. The report urges countries to strengthen domestic revenue mobilization, improve public financial management, and pursue debt transparency.
Meanwhile, global institutions including the World Bank and African Development Bank have raised concerns about the rising costs of commercial loans and the impact of delayed debt restructuring.
“Fiscal discipline is no longer optional,” says Dr. Fatima Mlingwa, a regional economist based in Arusha. “We need to rethink how we borrow—and how we spend.”
