Kenya’s banking sector posted record profits in the last financial year, outshining all other segments, particularly manufacturing and agriculture. At first glance, this performance might suggest a resilient economy.
But a closer look reveals a dangerous imbalance: a financial system thriving not on production or innovation, but on government borrowing. Meanwhile, the real economy—where jobs are created and livelihoods secured—is decaying.
This debt-fuelled model is no longer just an economic issue; it has now erupted into a full-blown social crisis.
The recent Gen Z-led protests are more than youthful discontent—they are a warning shot from a generation that has been priced out of opportunity. With unemployment at record highs, education increasingly unaffordable, healthcare out of reach, and urban housing in crisis, the frustrations of young Kenyans are grounded in painful realities.
The social fabric is tearing, held together only by anger and hopelessness.
According to Central Bank of Kenya data, domestic public debt surpassed Sh5.3 trillion in 2023, absorbing capital that should be stimulating the productive sector. Instead, the state continues to finance a bloated bureaucracy and recurrent expenditures via borrowing, while commercial banks profit handsomely from low-risk treasury bills and bonds.
The result is a dangerous cycle: banks lend to the government, state pays banks, and productive economy is starved of credit. This cycle benefits a tiny elite—those with direct access to power or financial markets—while the majority are left unemployed, indebted, and disillusioned.
This elite-centered model of governance and economic management has eroded national morale.
Rising crime rates, collapsing public healthcare, failing families, drug addiction among youth, and the looting of businesses during protests are all symptoms of a society that has been hollowed out by decades of exclusionary economic policy.
Kenya’s fiscal crisis, therefore, cannot be solved by accounting tricks or new taxes. It is rooted in a deeper moral crisis: a state captured by the interests of the few at the expense of the many. It is no coincidence that many of the political and financial elites benefit from government securities and inflated public contracts.
They are the architects of a system that sees economic growth in numbers while citizens sink further into despair.
To reverse this trajectory, bold steps are needed. First, the government must slash non-essential public expenditure and freeze domestic borrowing to release capital for the productive economy.
Second, public investment must prioritise sectors that improve lives, agriculture, manufacturing, housing, healthcare, and education.
Third, economic reforms must be shielded from elite capture by increasing public accountability and civic oversight.
The future of this country cannot rest on financial gymnastics or billion-shilling loans. No economy grows by borrowing to consume. True prosperity comes from empowering the productive majority—especially the youth—not enriching the already wealthy few.
Until Kenya reorients its economy toward inclusive growth, the promise of Vision 2030 will remain a mirage, and the Gen Z protests a preview of what lies ahead.
The writer is affiliated with Kenyatta University and writes on economics, governance, and development policy in Africa. [email protected]
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