Kenya has spent billions of shillings paying for loans that have not been utilised, with the Controller of Budget Margaret Nyakang’o warning that the recurring cost points to weaknesses in the preparation and implementation of government projects.
Over the past 11 years, the National Treasury paid Sh20.066 billion in commitment fees on loans whose funds had not been drawn.
Nyakang’o presented the figures before the National Assembly’s Public Debt and Privatisation Committee, which was examining the payments made to creditors for undisbursed loan facilities.
Between the 2015/16 and 2025/26 financial years, Kenya paid an average of Sh1.824 billion annually in commitment fees.
The cost reached a peak of Sh3.232 billion in 2017/18 before generally declining in subsequent years.
However, the problem remains unresolved. Payments rose from Sh1.070 billion in 2024/25 to Sh1.267 billion in 2025/26, signalling that Kenya continues to incur costs on financing it has yet to utilise.
Nyakang’o said the money could have supported essential public services. She noted that the Sh1.267 billion paid in 2025/26 could have financed one year of primary school capitation for about 627,000 pupils, based on the current rate of Sh2,020 per learner.
The payments come as Kenya continues to grapple with a significant debt burden. As of June 30, 2026, the country’s Public and Publicly Guaranteed Debt Stock stood at Sh13.010 trillion, representing a 10.3 per cent increase from Sh11.799 trillion recorded the previous year.
External debt accounted for Sh5.685 trillion of the total. During the 2025/26 financial year, Kenya received Sh764.80 billion from external loans, while another Sh1.277 trillion remained undisbursed.
Nyakang’o attributed the recurring commitment fees to loans being secured before projects are ready to begin. Delays in procurement, failure to meet lenders’ conditions and poor alignment between financing timelines and the government’s ability to implement projects have also contributed to the problem.
To prevent further payments on unused loans, the Controller of Budget has proposed seven measures, including stricter requirements to ensure projects are sufficiently prepared before loans are contracted.
She also proposed a facility-level monitoring system jointly managed by the National Treasury and agencies responsible for implementing projects.
An early-warning system should also be established to identify loan facilities at risk of remaining undrawn and attracting additional fees, Nyakang’o said.
She further recommended regular reviews of loans that have remained undisbursed for long periods to determine whether they should be restructured or cancelled.
The parliamentary committee had requested a 10-year reconciliation showing commitment fees paid for each loan. Nyakang’o said the exercise would require additional time to validate the information, although detailed figures for the 2025/26 financial year had already been submitted.
For the Controller of Budget, the issue goes beyond the financial cost to taxpayers and points to broader weaknesses in government project planning and implementation.
“Commitment fees are not just an avoidable cost but should now be viewed as a symptom of inefficiencies that need to be addressed,” Nyakang’o told the committee.
