State corporations increased their commercial borrowing outside government guarantees by 38.2 percent to Sh62 billion in the year to June 2026, exposing the Treasury to growing contingent risks if the firms fail to repay their lenders.
The stock of non-guaranteed debt increased by Sh17.1 billion in the period, adding to the stockpile of Sh44.9billion recorded in June 2025.
The increase means the debt load by State firms outside explicit sovereign guarantees has grown by more than a third in a single year, adding to the Treasury’s financial risks.
The National Treasury says in the latest annual debt management report that the increase ‘warrants enhanced monitoring given that such borrowing, although not explicitly guaranteed by the government, may present contingent fiscal risks’ when the State-controlled companies experience difficulties servicing their obligations.
The report shows that five entities hold 81.9 percent of all non-guaranteed debt, meaning unlikely financial challenges at a handful of firms could expose the government to high costs.
The National Cereals and Produce Board (NCPB) was the largest borrower at Sh13.94 billion fertiliser loan owed to KCB Bank Kenya, equivalent to 22.5 percent of the total as at end of June 2026.
Kenya Electricity Generating Company (KenGen), 70 percent owned by the State, owed Sh9.77 billion, including Sh9.32 billion borrowed from Absa Bank and Sh443 million from the French development-finance institution Agence Française de Développement (AFD).
Kenya Airports Authority (KAA) owed Sh9.65 billion, comprising loans from the World Bank and AFD, with the latter facility listed in the report as AFD (MIA).
Kenya Forest Service (KFS) had Sh9.25 billion in outstanding debt owed to the French Government, the African Development Bank and the African Development Fund.
Kenya Ports Authority (KPA) owed Sh8.18 billion across two loans from Stanbic Bank, amounting to Sh3.82 billion and Sh4.36 billion, respectively. The five entities together had Sh50.8 billion in outstanding non-guaranteed loans, leaving Sh11.2 billion spread across the other six corporations covered by the Treasury’s assessment.
The concentration is significant in energy and infrastructure-related entities, with energy and petroleum companies accounting for Sh19.59 billion or 31.6 percent of the total exposure.