Kenya Loan Fees Put Public Spending Under the Spotlight
Kenya Loan Fees are facing renewed scrutiny after parliamentary records revealed that the country paid Sh20.1 billion in commitment fees for external loans that were never drawn over an 11-year period.
The figures were presented by Controller of Budget Margaret Nyakang’o before the National Assembly’s Public Debt and Privatisation Committee.
The payments covered the period from the 2015/16 financial year to 2025/26.
That means the government spent an average of about Sh1.82 billion every year to keep unused foreign credit lines available.
The revelation has raised fresh questions about how Kenya plans, negotiates and manages external borrowing.
How Kenya Loan Fees Accumulated
Commitment fees are generally charged by lenders when money has been approved but remains undrawn.
For governments, the fees are intended to compensate lenders for keeping funds available.
However, the parliamentary figures show how expensive delays can become when projects fail to move forward.
According to the figures presented to lawmakers, Sh7.65 billion of the total was accumulated between 2020 and 2025.
That represents more than a third of the overall amount paid during the 11-year period.
The issue has therefore become more than an accounting concern.
It has become a question of whether taxpayers are getting value from approved development financing.
Billions Remained Unutilised
Treasury records cited in the parliamentary discussions also indicated that Kenya’s unutilised donor-funded portfolio had grown to more than Sh515 billion by mid-2024.
The large portfolio reflects projects where approved financing had not been fully used.
When projects stall, the government can face additional costs while still carrying the obligations attached to the financing agreements.
Parliamentary investigators found that some loan agreements had been signed before important preparations were completed.
These included land compensation arrangements, technical designs and local procurement processes.
Such delays can prevent projects from starting on schedule.
Infrastructure Projects Among Those Affected
Some of the highest commitment fees were associated with major infrastructure projects.
These included the Mombasa Gate Bridge, the National Urban Transport Improvement Project and the Isiolo–Mandera Transport Corridor.
These projects involve significant development ambitions.
However, delays in implementation meant that approved foreign financing remained unused for extended periods.
The situation highlights a familiar challenge in public investment.
Securing money is only one part of delivering a project.
Governments must also complete planning, land acquisition, procurement and other technical requirements before the funds can effectively be spent.
Kenya Loan Fees Could Have Funded Education
The Parliamentary Budget Office highlighted another dimension of the issue.
It warned lawmakers that the Sh20.1 billion paid in commitment fees could have financed a full term of capitation for approximately 9.95 million primary school pupils.
That comparison puts the financial cost into a more relatable context.
Money paid simply to maintain unused credit could potentially have supported essential public services.
For taxpayers, the debate is therefore not only about borrowing.
It is also about opportunity cost.
Every shilling spent on unnecessary charges is money that cannot be directed toward another government priority.
Parliament Demands Action
Members of the Public Debt and Privatisation Committee have now called for greater scrutiny of Kenya’s active external credit lines.
Lawmakers directed the National Treasury to review the portfolio and consider cancelling stagnant bilateral loans.
The objective is to prevent additional commitment fees from accumulating on facilities that are unlikely to be utilised.
Such a review could also help the government identify projects facing administrative or technical bottlenecks.
The bigger challenge will be ensuring that future borrowing agreements are linked to projects that are ready for implementation.
What the Kenya Loan Fees Debate Means
The controversy comes at a time when Kenya continues to face pressure over public debt and government spending.
External borrowing can provide important financing for infrastructure and development.
But borrowing becomes more difficult to justify when approved funds remain unused while taxpayers continue paying associated costs.
The latest figures could therefore increase pressure on Treasury officials to improve coordination between ministries, lenders and project implementation teams.
Better preparation before signing agreements could also reduce delays.
The Kenya Loan Fees debate is ultimately about more than Sh20.1 billion.
It is about how efficiently public money is managed and whether government projects are sufficiently prepared before foreign financing is secured.
If loans are approved but projects remain stalled, taxpayers can end up paying for money that never reaches the intended development programmes.
Parliament’s call for a review of inactive credit lines could therefore be an important step.
The real test, however, will be whether the government can turn these findings into better planning, faster project implementation and fewer unnecessary costs for Kenyan taxpayers.
