Walloped by mounting debt and shaken by deadly protests that forced it to abandon new tax measures, Kenya is now turning to its diaspora community in search of relief.
The government is preparing to issue a diaspora bond valued at between $250 million and $500 million, with hopes of ultimately raising as much as $3.8 billion, Prime Cabinet Secretary Musalia Mudavadi said this week.
The bond is being designed in partnership with a World Bank unit, which is advising Nairobi on how best to structure the security to attract Kenyans abroad. The funds are expected to go into critical projects spanning rural electrification, roads, rail expansion, and airport upgrades. The plan reflects growing urgency as Kenya juggles high borrowing costs, a heavy debt burden, and political pressure to avoid further tax hikes.
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The shift comes against the backdrop of an International Monetary Fund mission scheduled for next month, where officials will discuss a new lending program. IMF engagement has been central to Kenya’s efforts to stabilize its balance sheet, but the political cost of fiscal reforms has been steep. In 2024, President William Ruto’s government was forced to retreat on controversial tax increases after weeks of violent demonstrations left at least 60 people dead and rattled investor confidence. The Nairobi Securities Exchange lost about $600 million in value in just two weeks during the turmoil.
Mudavadi, speaking on the country’s fiscal direction, acknowledged that the government had to recalibrate.
“Because of the backlash from citizens, we shifted our focus toward alternative financing rather than aggressive revenue-raising measures,” he said.
He stressed that Nairobi is seeking to “live within our means” while taking into account global economic challenges.
As part of this recalibration, the administration has set out a broader strategy that combines privatizations, public-private partnerships, and asset securitization to fund infrastructure. Officials believe these measures, together with the diaspora bond, will ease fiscal pressures without inflaming public anger over taxation.
Kenya is also working to repair its international financial standing. Mudavadi disclosed that the country has made progress toward being removed from the Financial Action Task Force’s “grey list,” where it was placed over concerns about financial transparency and money laundering controls. Although he did not provide a timeframe, removal from the list would be a critical step toward restoring investor confidence.
The diaspora bond proposal is, in part, a recognition of the significant role Kenyans abroad play in the economy. Remittances remain a key foreign exchange earner, and officials hope to tap into this goodwill by giving citizens overseas a vehicle to invest directly in national development.
But analysts caution that the success of the bond depends on how it is structured and whether the government can convince investors of its credibility after recent economic shocks. With Kenya still grappling with ballooning debt and wary citizens at home, the diaspora initiative is seen as both a test of trust and a lifeline.
Meanwhile, in a related development across Africa, Burkina Faso has announced plans to broaden its partnership with Russia beyond weapon trade, underlining how African nations are diversifying alliances to address their financial and security challenges.