Kenya’s recent upgrade by S&P Global Ratings from B– to B is more than a technical adjustment, it’s a turning point in the country’s economic story.
As Kenya edges closer to joining Botswana, Mauritius and Morocco among Africa’s investment-grade economies, the ripple effects are already being felt: Eurobond yields have dropped by 0.6 percent, unlocking an estimated $220 million in potential savings on debt service.
Behind these numbers lies a powerful truth, sound fiscal management and investor confidence are not just about macroeconomics; they translate directly into classrooms built, hospitals equipped and opportunities created for millions of Kenyans.
The central argument is simple: credit ratings are not just technical assessments; they are decisive levers of Africa’s ability to invest in its people.
Yet, global credit rating methodologies often undervalue African economies, creating a vicious cycle where high borrowing costs fuel debt distress and underdevelopment.
Reforming the international financial architecture, including how African nations are assessed, is no longer optional; it is urgent if countries like Kenya are to finance Vision 2030 and the Sustainable Development Goals (SDGs).
Kenya’s upgraded rating is part of a much longer journey. Since 2003, the United Nations Development Programme (UNDP) has been a steadfast partner in supporting African countries, including Kenya, to improve their access to affordable finance through sovereign credit ratings.
In 2025, Kenya has been included as a focus country in this renewed phase, reflecting the country’s readiness and the urgency of the moment.
During the first phase, support focused on awareness creation and technical advisory. Over time, this evolved into more structured engagements, such as policy dialogues, peer exchanges and capacity development tailored to national contexts.
Kenya has been a direct beneficiary of these sustained efforts on how to navigate and engage effectively with credit rating agencies and seek to understand the methodologies used.
The knowledge gained has helped demystify the ratings process, strengthen Kenya’s negotiating position and deepen fiscal resilience.
To build on these gains, the Government of Kenya, through the National Treasury, now intends to institutionalise this work by forming an Inter-agency Technical Working Committee on Sovereign Credit Rating.
This committee will serve as a coordination platform bringing together key stakeholders to streamline data sharing, align communication with rating agencies and embed credit rating priorities into national fiscal planning.
Why does this matter now?
Africa’s greatest asset, its young and dynamic population, should be driving the continent’s transformation. Yet, as countries strive to invest in jobs for youth, expand access to energy and tackle the climate crisis, these ambitions are colliding with an unfairly costly financing environment.
According to UNDP’s 2023 study, Lowering the Cost of Borrowing in Africa, distortions in sovereign credit ratings have cost African countries an estimated $75 billion over the life of their bonds resources that could have powered schools, startups and opportunities for millions of young people.
That is more than many countries’ entire education budgets combined. Worse still, more than 50 developing nations now spend more on servicing debt than on health or education.
In 2023 alone, private creditors withdrew $33.4 billion more from developing countries than they provided. Credit ratings may sound remote, but their consequences determine whether a child in rural Kenya has a school to attend, or a clinic has medicine.
Three pieces of evidence illustrate this clearly: First, Kenya’s recent credit rating upgrade demonstrates the tangible benefits of fairer assessments.
By lowering borrowing costs, the country can redirect scarce resources from debt servicing into critical priorities such as infrastructure, agriculture and climate resilience.
The upgrade was not just about improved statistics but also reflected deliberate reforms, notably the 2025 Finance Act, which enhanced tax compliance and signalled fiscal credibility.
These measures strengthened investor confidence and underscored Kenya’s commitment to responsible economic management. Still, challenges remain, particularly with “split ratings” across major agencies, which complicate investor perceptions and inflate borrowing costs.
Second, this issue extends beyond Kenya. Across Africa, skewed rating methodologies and inconsistencies among agencies trap economies in a cycle of inflated borrowing costs.
Countries like Egypt, Nigeria and Ethiopia face similar disparities, while the so-called “sovereign ceiling” ties private sector borrowers to their government’s outlook, preventing them from accessing cheaper financing even when they demonstrate resilience and reform.
These systemic barriers unfairly penalise African countries and firms, limiting their ability to translate reform momentum into affordable capital for development.
Third, there is a credible pathway forward. Initiatives like the UNDP Africa Credit Ratings Initiative, launched in 2024 with AfriCatalyst and support from Japan, are equipping governments with tools to engage rating agencies, improve data quality, and close information gaps.
Regional conversations, such as those held in Abidjan in June 2025 and Addis Ababa in September 2024, are building African officials’ capacity to demystify and challenge rating assumptions.
Meanwhile, the African Union’s push for a continental credit rating agency, though still delayed, reflects growing recognition that Africa needs context-sensitive, independent assessments. These steps are not about shielding poor governance but ensuring Africa’s credit story reflects reality, not bias.
The point is, this is not simply about improving credit scores, it is about reclaiming agency over Kenya’s development narrative.
To sustain this momentum, three actions are critical: institutionalising regular engagements with rating agencies grounded in credible data and transparency; resourcing the Interagency Technical Committee to coordinate effectively across government and championing reforms to ensure global rating methodologies reflect the realities of developing economies.
With declining Official Development Assistance and an evolving development landscape, Kenya can prioritise attaining an investment-grade credit rating to attract capital, reduce borrowing costs and strengthen access to global markets. This will broaden our fiscal space and unlock the financing required to accelerate Kenya’s development priorities.
Kenya’s experience proves that ratings are not fixed.
A downgrade in 2024, triggered by fiscal uncertainty, was reversed within a year through credible reforms and sustained engagement. Stronger ratings are more than numbers; they are instruments of trust and development.
They determine whether Kenya can access affordable finance to power Vision 2030 and achieve the SDGs. Better ratings unlock fairer borrowing terms, free resources for social investments, expand debt capacity, catalyse private-sector growth, and generate jobs for the country’s youthful population, unlocking possibilities for generations to come.
Dr Chris Kiptoo is the Treasury Principal Secretary and Dr Jean–Luc Stalonis the Kenya Resident Representative of the United Nations Development Programme (UNDP)
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