Rising govt borrowing is squeezing private sector credit, stakeholders reveal

Kenya's private sector is encountering difficulties in obtaining credit due to the government's increasing borrowing from local banks, which is diverting funds away from businesses. This issue was discussed during the inaugural Multisectoral Forum on Public Debt Management, held by the National Assembly’s Committee on Public Debt and Privatisation on August 20, 2026.

The forum aimed to address the impact of public debt on businesses, investment, and economic growth. The Kenya Bankers Association reported that the government's growing need for domestic borrowing has led banks to invest more in government securities, resulting in a 58 percent increase in such investments between June 2024 and May 2026, while lending to the private sector rose by only 11 percent during the same period.

The Kenya Association of Manufacturers attributed limited credit access to broader challenges within the manufacturing sector, such as high production costs, energy prices, and financing. The Kenya Private Sector Alliance advocated for public-private partnerships and a stable tax regime to foster investment and business expansion.

The forum also called for the automation of the Public Debt Management Office to improve transparency in debt management, as many participants found the current system difficult to navigate.