When debt crowds out health: The hidden cost of Kenya's Sh13 trillion debt burden

Kenya’s Sh13 trillion debt is squeezing healthcare funding, experts warn, threatening essential services and Universal Health Coverage. [Courtesy

Kenya’s Sh13 trillion public debt is increasingly being felt beyond the Treasury, with health experts warning that fiscal pressure and declining donor support could leave critical health programmes struggling to maintain services.

The warning comes as Kenya attempts to finance its health system more independently while facing rising demand for healthcare and shrinking external support.

For patients, the consequences of this transition may not appear in government debt figures. They may instead emerge as a missed HIV test, an unavailable medicine, a delayed diagnosis or a patient forced to return to hospital because the first treatment did not work.

Dr Samuel Kinyanjui, Country Director of AIDS Healthcare Foundation (AHF) Kenya, says the pressure on public finances is already affecting how health services are prioritised.

“When the budget is squeezed, chronic care gets squeezed,” Kinyanjui said, citing HIV, tuberculosis, diabetes and hypertension among programmes vulnerable to funding pressures.

His warning comes against a backdrop of a sharp decline in external health financing.

Data from the Centre for Epidemiological Modelling and Analysis at the University of Nairobi shows that external funding for health fell from Sh126 billion in the 2024/25 financial year to Sh54 billion in 2025/26. The decline followed major reductions in donor support, including the withdrawal of United States government funding.

The funding gap comes at a time when Kenya is already under pressure to meet its debt obligations and expand domestic financing for healthcare.

The Institute of Public Finance estimates that external support accounted for more than half of spending in some major health programmes in 2023/24, including 68 per cent of HIV/AIDS investments, 85 per cent of malaria investments and 71 per cent of investments in reproductive, maternal, newborn, child and adolescent health.

This dependence means that changes in donor priorities can quickly translate into pressure on Kenya’s health system.

The Global Fund, for instance, has allocated Kenya about US$324.4 million for the 2027–30 period, down from US$408 million in the current cycle. The reduction will increase pressure on the government to finance HIV, TB and malaria programmes from domestic resources.

For HIV alone, the Global Fund allocation has been reduced by about 18 per cent in the next funding cycle, further underscoring the urgency of Kenya’s transition towards greater domestic financing.

Health financing experts argue that Kenya must build a system capable of sustaining programmes even when external support declines.

Kinyanjui says the answer cannot be found in increasing health allocations alone. Governments must also determine whether the money allocated is producing measurable improvements in health outcomes.

“It doesn’t matter if you put Sh4 trillion of Kenya’s budget into health. If the business model is not robust and organized for efficiency, it will not be sufficient,” he said.

His argument highlights a less visible problem within healthcare: the cost of inefficiency.

Kinyanjui points to hospital reattendance, when patients return to a health facility within the same month with the same or similar symptoms as one indicator of possible gaps in diagnosis, treatment or access to medicines.

“When a person comes back, we have lost the doctor’s time, laboratory reagents and treatment. We are losing a lot of money,” he said.

The problem becomes more serious when limited resources are combined with rising demand.

Kenya is facing a growing burden of non-communicable diseases while continuing to manage infectious diseases such as HIV and TB. Unlike acute illnesses, chronic conditions require sustained treatment, monitoring and access to medicines.

Any interruption can therefore have consequences that extend beyond a single hospital visit.

The World Health Organization has previously documented a decline in domestic funding available to Kenya’s national TB programme, although increased international donor support has helped compensate for some of the shortfall.

A recent assessment cited by the Institute of Public Finance estimates Kenya could face a health financing gap  of about Sh78 billion as external support declines.

The effects are already visible in some areas of service delivery.

A 2026 analysis reported a Sh34.7 billion gap in health commodities in the 2025/26 financial year. It also found that counties would require an estimated Sh47.8 billion annually to absorb more than 41,000 staff previously supported through PEPFAR, highlighting the scale of the transition facing the health sector.

For reproductive health, HIV prevention and community-based services, the implications are particularly significant because these programmes depend not only on medicines but also on laboratory systems, community health workers, outreach and supply chains.

The challenge is therefore how Kenya can protect these services while simultaneously meeting its debt obligations.

Recent government borrowing plans show that Kenya continues to seek new sources of financing, including sovereign, Samurai, Sukuk and sustainability-linked bonds, as it works to bridge its fiscal deficit. The government has also indicated plans to retire some high-cost external debt to reduce servicing costs.

For health experts, however, the bigger question is what happens when debt repayments compete with investment in the systems that keep people healthy.

Kinyanjui argues that health financing should be viewed as an investment rather than merely an expenditure.

A functioning health system prevents illness, keeps people productive and reduces the financial burden of disease on households. Conversely, underinvestment can create a cycle in which patients delay treatment, conditions worsen and healthcare becomes more expensive.

Kenya’s challenge is not simply to raise more money for healthcare. It is to create predictable domestic financing, reduce waste, strengthen accountability and ensure that money reaches services that improve health outcomes.

The country’s transition away from donor dependence may ultimately be necessary for a more sustainable health system. But without careful planning, experts warn, the transition could come at a cost particularly for programmes serving the poorest and most vulnerable populations.

The question facing Kenya is therefore no longer only how much it owes.

It is whether, in paying its debts and balancing its books, the country can still afford to invest in the health of its people.