Experts at a forum hosted by the Kenya Editors’ Guild (KEG) and the International Republican Institute (IRI) warned that the government’s securitization of essential funds risks undermining long-term revenue collection. Alexander Riithi, Head of Programs at The Institute of Social Accountability (TISA), highlighted that the Road Maintenance Levy Fund, which allocates Ksh 7 per litre of fuel for infrastructure projects, has been leveraged to finance road construction. This mechanism, he argued, shifts future revenue obligations to current and future citizens, creating irreversible fiscal commitments. "Every citizen consuming fuel is effectively paying Ksh 7 per litre to service this debt," Riithi stated, emphasizing the lack of parliamentary oversight and public transparency in the process. The International Monetary Fund (IMF) has cautioned that Kenya’s securitization model should be integrated into the nation’s total public debt. As of June 2024, Kenya’s total public debt reached Ksh 13 trillion, with domestic debt accounting for Ksh 7.33 trillion and external debt Ksh 5.68 trillion. Kwame Owino, CEO of the Institute of Economic Affairs, noted that 55% of this debt is owed to domestic institutions, underscoring the scale of internal financial obligations. Meanwhile, the Kenya Revenue Authority (KRA) has missed collection targets, exacerbating deficits and forcing increased borrowing. This fiscal strain has contributed to a Ksh 1.2 trillion budget shortfall in the 2024/25 fiscal year, with projections of further widening ahead of the 2025 general election. Riithi criticized the off-balance-sheet nature of the securitization, which bypasses parliamentary scrutiny and public input. He called for a regulatory framework to ensure transparency, public participation, and accessible terms for securitization agreements. "Securitization is increasing the cost of living and doing business without public awareness," he said. The lack of accountability, he argued, risks entrenching unsustainable fiscal policies. Experts also warned that the government’s reliance on revenue streams as collateral for debt could erode the financial stability of social programs, leaving future generations to bear the consequences of today’s fiscal decisions. The debate over securitization highlights broader challenges in Kenya’s economic governance. With public debt rising and revenue collection under pressure, the need for transparent fiscal policies has become urgent. As the government navigates the 2025 election cycle, balancing infrastructure investment with long-term fiscal health remains a critical challenge. Without reforms, the current approach risks deepening economic vulnerabilities and limiting the state’s capacity to fund essential services.
Experts Warn Securitization Surge Threatens Future Social Funding in Kenya
KBC - Experts warn securitization frenzy to weaken future revenue streams
paragraphs_2024/25 fiscal year, with projections of further widening ahead of the 2025 general election. Riithi criticized the off-balance-sheet nature of the securitization, which bypasses parliamentary scrutiny and public input. He called for a regulatory framework to ensure transparency, public participation, and accessible terms for securitization agreements. "Securitization is increasing the cost of living and doing business without public awareness," he said. The lack of accountability, he argued, risks entrenching unsustainable fiscal policies. Experts also warned that the government’s reliance on revenue streams as collateral for debt could erode the financial stability of social programs, leaving future generations to bear the consequences of today’s fiscal decisions. The debate over securitization highlights broader challenges in Kenya’s economic governance. With public debt rising and revenue collection under pressure, the need for transparent fiscal policies has become urgent. As the government navigates the 2025 election cycle, balancing infrastructure investment with long-term fiscal health remains a critical challenge. Without reforms, the current approach risks deepening economic vulnerabilities and limiting the state’s capacity to fund essential services.