Kenya is working on a $1 billion debt-for-food security swap that could be finalised by March 2026, according to a new Finance Ministry document. The plan is part of Nairobi’s efforts to free up funds for critical food programmes while easing the country’s heavy debt repayment burden.
Although the government has not revealed all partners in the deal, Finance Minister John Mbadi confirmed in April that Kenya is already in advanced talks with the UN’s World Food Programme (WFP). If successful, the arrangement would redirect savings from restructured debt into strengthening agricultural value chains, scaling up school feeding schemes, and building climate-resilient food systems.
Debt-for-food swaps are a creative financing tool that allows governments to restructure debt on easier terms in exchange for committing resources to social projects. With global food prices volatile and climate shocks hitting local production, Kenya sees this as a timely way to secure both fiscal space and food security.
The initiative also signals Nairobi’s shift toward diversifying funding sources at a time when traditional borrowing has become more costly. Rising US interest rates and investor caution in emerging markets have made access to global capital more challenging, especially for debt-burdened economies like Kenya.
Alongside the proposed swap, the government plans to issue $500 million in sustainability-linked bonds by March 2026. These bonds reward borrowers with favourable rates if they meet agreed social or environmental targets, making them attractive to impact-driven investors. Kenya also expects $757 million from the World Bank by March 2025, followed by another $457 million in June 2026, to support fiscal reforms, clean energy, and climate adaptation.
Still, the challenge is immense. Treasury estimates suggest Kenya’s public debt will surpass 70% of GDP in 2025, with servicing costs eating up a big share of revenue. Analysts like Nairobi-based economist Sarah Wanjiru say debt-for-food swaps could provide much-needed breathing room — but only if funds are transparently managed and truly reach vulnerable communities.
Kenya’s urgency is underscored by the fact that more than 5 million people in arid and semi-arid regions remain food insecure. Years of drought, destructive floods, and high global grain costs have deepened the crisis. For President William Ruto’s administration, securing this $1 billion swap would be both a financial relief and a political victory, aligning debt management with a priority that affects millions of households: food on the table.
