Kenyan President William Ruto has raised concerns over the high cost of borrowing from foreign lenders, describing the current financial models imposed on African nations as flawed and unsustainable. Speaking at an economic forum in Nairobi, Ruto criticized international lending institutions for burdening developing countries with exorbitant interest rates, which he said stifle growth and economic sovereignty.
During his address, Ruto argued that African economies, including Kenya’s, face unfair financial conditions that make it difficult to access affordable credit for development projects. He noted that while developed nations borrow at significantly lower interest rates, African countries are often subjected to higher risk premiums, even when their economic fundamentals are stable. We are being punished for being African. While developed countries borrow at interest rates as low as 2%, we are forced to pay upwards of 10% or more. This is a flawed model that needs urgent reform, Ruto stated.
He added that the current structure of international finance perpetuates economic dependency, making it harder for African nations to invest in infrastructure, health, and education without falling deeper into debt.
Kenya has been grappling with a growing debt burden, with a significant portion of its external debt held by international lenders such as the World Bank, the International Monetary Fund (IMF), and Chinese financial institutions. Recent reports indicate that Kenya’s public debt has surpassed KES 10 trillion, raising concerns over sustainability and the country’s ability to meet repayment obligations. High-interest loans have put immense pressure on Kenya’s economy, leading to increased taxation, spending cuts, and public dissatisfaction. In 2023, the government introduced new tax measures to boost revenue, sparking protests from citizens and business leaders who argue that the cost of living has become unbearable.
To address these challenges, Ruto called for African nations to explore alternative financing models, including:
Strengthening regional financial institutions to provide affordable credit within Africa.
Advocating for debt restructuring to ease repayment terms.
Promoting public-private partnerships (PPPs) to reduce reliance on external loans.
Enhancing domestic revenue mobilization through tax reforms and efficient public spending.
The president also urged international financial institutions to adopt a more equitable approach to lending, emphasizing that developing nations need financing that supports long-term growth rather than trapping them in cycles of debt.
Ruto’s remarks have sparked debate among economists and policymakers. Some experts agree that Africa faces unfair lending practices, arguing that global financial institutions often impose conditions that limit economic flexibility. The issue of debt sustainability is a major concern for many African countries. Without lower interest rates and better repayment terms, economic progress will always be hindered, said Prof. James Mwangi, an economist at the University of Nairobi.
However, others argue that African nations must take responsibility for managing their finances more effectively. Critics have pointed out that corruption, mismanagement, and inefficient public spending have contributed significantly to the debt crisis.
Ruto is expected to push for financial reforms at upcoming international summits, including meetings with the IMF and World Bank. Kenya, alongside other African nations, has been advocating for changes to the global financial system that would allow developing countries to access credit at fairer rates. The discussion on Africa’s debt crisis continues to gain momentum, with leaders from Ghana, Nigeria, and South Africa also voicing similar concerns. There is growing pressure on global lenders to rethink their risk assessments and provide financial solutions that empower rather than hinder economic development.
As Kenya struggles with high borrowing costs, Ruto’s calls for financial fairness resonate across Africa. Whether the global financial system will heed these concerns remains to be seen, but one thing is clear—African leaders are demanding a seat at the table in shaping the future of international finance.
