Global credit ratings agency Standard & Poor’s (S&P) has upgraded Kenya’s long-term sovereign credit rating from ‘B-’ to ‘B’, citing a significant reduction in near-term external liquidity risks.
The agency, in a report on Friday, August 22, also reaffirmed the country’s outlook as ‘stable’, reflecting confidence in Kenya’s ability to manage its fiscal and external obligations despite ongoing macroeconomic pressures.
According to S&P’s statement, robust export performance—particularly in horticulture, tea, and minerals—combined with strong inflows of diaspora remittances, have bolstered the country’s foreign exchange reserves. As of mid-2025, Kenya’s forex reserves stood at approximately $7.5 billion, equivalent to over 4 months of import cover, a key buffer against external shocks.
These developments have eased pressures associated with the country’s persistent current account deficit, which was estimated at 4.6% of GDP in 2024, and helped improve investor confidence. Kenya has also successfully met recent Eurobond obligations, further supporting the improved outlook.
S&P noted that Kenya’s economic growth prospects remain favorable. The economy is expected to expand by 5.6% in 2025, surpassing earlier projections by the Kenyan National Treasury (5.3%) and the Central Bank of Kenya (5.2%). This projected growth comes on the back of continued investment in infrastructure, recovery in the agricultural sector following favorable weather conditions, and increased activity in the services and manufacturing sectors.
“Eurobond amortization will remain manageable over 2025-2027, supported by debt liability operations earlier this year, while monetary easing over the past year has helped lower domestic yields and stimulate private-sector credit growth,” S&P said.
Despite these gains, the agency highlighted ongoing risks, including elevated interest payments, which consume a significant share of government revenue, and the slow pace of fiscal consolidation. Kenya’s public debt remains high, at around 70% of GDP, although recent steps—such as subsidy reforms and revenue mobilization initiatives—suggest a gradual move toward fiscal sustainability.
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S&P Global Ratings comparison to Fitch Ratings
S&P Global Ratings evaluates the creditworthiness of debt instruments—such as bonds—and the entities that issue them. Creditworthiness refers to the likelihood that a borrower will default or otherwise be unable to meet its debt obligations.
Much like academic grading systems, S&P assigns ratings using a scale ranging from A to D, often supplemented by plus or minus signs or numerical indicators to reflect relative standing within each category. In this scale, higher ratings indicate lower perceived risk, while lower ratings signal higher risk of default.
According to S&P’s classification, a rating of ‘BBB’ or higher is considered investment grade, indicating strong capacity to meet financial commitments and representing the safest category of investments.
Ratings below ‘BBB’ fall into the speculative grade category, which denotes a higher degree of credit risk and greater potential for volatility or financial instability.
American credit rating agency Fitch Ratings had in July affirmed Kenya’s Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) at ‘B-‘ with a “stable” outlook.
According to the agency, “Kenya’s ‘B-‘ rating reflects strong medium-term growth prospects, a diversified economy and strengthening of the monetary policy framework.
“These strengths are balanced against weak governance indicators relative to peers, high and rising debt servicing costs, high external indebtedness underpinned by challenges to fiscal consolidation, as well as a high level of informality and political and social challenges constraining government revenue mobilization,” said Fitch Ratings.
President William Ruto, while speaking earlier in the week in Japan on the sidelines of the Tokyo International Conference on African Development (TICAD 9), expressed optimism about the country’s economic trajectory.
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He emphasized that Kenya’s growth this year would outpace official expectations, even in the face of global headwinds such as rising U.S. tariffs, volatility in commodity prices, and tightening global financial conditions.
“As Kenya’s economy expands and grows, our country offers many opportunities for the private sector in Japan, including in digitisation, provision of medical equipment for our universal health coverage, precision farming, e-vehicle manufacturing and green energy industrialisation, among others,” he said.
Ruto supports the formation of the Africa Credit Rating Agency
In February 2025, President Ruto publicly criticized global credit rating agencies and reaffirmed his support for the establishment of the Africa Credit Rating Agency (AfCRA)—a continental initiative aimed at offering more accurate and fair assessments of African economies.
Speaking during a Presidential Dialogue on the Establishment of an Africa Credit Rating Agency held in Addis Ababa, Ethiopia, on February 14, 2025, Ruto emphasized that the current global financial architecture, particularly the credit rating ecosystem, systematically undervalues Africa’s economic reality.
The dialogue, held on the sidelines of the 37th African Union Ordinary Summit, was facilitated by the African Peer Review Mechanism (APRM) and attended by multiple Heads of State, financial experts, policymakers, and international development partners.
Ruto argued that international credit rating agencies—such as S&P, Moody’s, and Fitch—continue to rely on outdated economic models, subjective metrics, and biased risk assessments when evaluating African countries. He contended that this results in inflated borrowing costs, deters critical investments, and undermines development financing.
“The result is that they paint an unfair picture of our economies, and this has devastating effects because it leads to distorted ratings of what the situation is really. This also leads to exaggerated risks for our countries and continent and obviously and unjustifiably that leads to high borrowing rates,” said Ruto. “These prejudice assessments come at an enormous cost to Africa. It deters investment, distorts global trade, and delays progress towards sustainable development goals.”
The establishment of AfCRA is being advanced as part of broader efforts to reform the global financial system, including ongoing calls from African leaders for more equitable access to international capital markets, debt restructuring mechanisms, and increased representation in multilateral financial institutions.
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