Govt Borrows Ksh 1.25 Trillion In One Year, 10 Multibillion Oil Blocks Up For Auction, Inflation Hits 4.5%

How Govt Borrowed Ksh 1.25 Trillion in One Year, 10 Oil Blocks Up for Auction, Kenyans Pay More for Fare and Gas

Hello, I’m Annah. Welcome to today’s edition of The Business Roundup, your go-to source for the latest insights into Kenya’s evolving business scene. In this edition, we look at how Kenyans are digging deeper into their pockets to pay higher fares, how the government borrowed KSh 1.25 trillion in one year, the auction of 10 oil blocks, and other key stories.

Kenya’s inflation rose to 4.5% in August 2025 from 4.1% in July, with core inflation at 3.0% as the index dipped slightly to 129.57, while non-core inflation stood at 9.2%.

This means that the general price level in August 2025 was 4.5% higher than in August 2024. The increase was mainly driven by higher prices in Food and Non-Alcoholic Beverages (8.3%), Transport (4.4%), and Housing, Water, Electricity, Gas, and Other Fuels (0.8%) over the one-year period.

Together, these three divisions account for more than 57% of the total weight across the 13 major expenditure categories.

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Kenyans Pay More for Fare and Gas as Inflation Hits 4.5%

In August 2025, prices within the food and non-alcoholic beverages division showed mixed trends. Price drops were recorded for items such as fresh unpacked cow milk (-0.9%), fortified maize flour (-1.7%), sifted maize flour (-1.5%), beans (-0.7%), loose maize grain (-0.4%), and oranges (-0.7%).

On the other hand, notable increases were observed in vegetables, with cabbage prices registering the highest rise at 6.3%, followed by carrots (2.4%), sukuma wiki (1.9%), and tomatoes (1.2%).

Prices of white wheat flour, onions (bulb), and leeks rose by 0.9% each, while potatoes increased by 0.7%.

In the transport division, prices also showed mixed movements. Petrol prices fell by 0.5%, while Diesel prices remained unchanged during the month.

However, passenger transport costs rose sharply, with the bus/matatu fare on the Mombasa–Nairobi route increasing by 15.4%. Local transport costs also went up, as tuk-tuk fares rose by 1.5%.

Prices in the housing, water, electricity, gas, and other fuels division showed varied trends. Electricity charges declined, with 50kWh band prices falling by 2.3% and 200kWh band prices dropping by 2.1%.

Similarly, Kerosene/Paraffin prices decreased by 0.6%. On the other hand, single-room house rent increased by 0.1%, while gas/LPG prices rose by 0.4%.

County Bus Service Announces Jobs For Conductors &Amp; Drivers — Photo of Matatus within Nairobi CBD. PHOTO/Wikimedia Commons

Kenya to Auction 10 Multibillion Oil Blocks

Kenya is preparing to put 10 oil and gas exploration blocks up for auction this September, marking its first licensing round since introducing a new petroleum law six years ago.

Principal Secretary for Petroleum, Mohamed Liban, on Monday, September 1, said Kenya currently has 50 blocks across four sedimentary basins, with 10 now ready for exploration.

“We have 50 blocks in four sedimentary basins, of which 10 are ready for marketing,” Mohamed Liban said. “This offering represents a new era in petroleum exploration, aligning Kenya with global standards.”

According to Commissioner for Petroleum Joseph Otieno, the blocks on offer this month are in the Anza and Lamu basins.

The offered blocks were selected based on geoscientific data to ensure a transparent allocation process, with the government providing detailed seismic surveys, geological reports, and well data.

The move follows Kenya’s decision in May to restructure petroleum exploration blocks by introducing flexible contracts and tax incentives.

Energy And Petroleum Cs Opiyo Wandayi During A Past Visit To Kenya Pipeline Company (Kpc). Photo/Kpc. — Energy and Petroleum CS Opiyo Wandayi during a past visit to Kenya Pipeline Company (KPC). PHOTO/KPC.

How Kenya borrowed Ksh1.25 trillion in One Year

The government borrowed Ksh1.25 trillion in the just-ended financial year, according to new figures from the Central Bank of Kenya (CBK), sparking growing concern among economists and citizens over the country’s debt trajectory.

According to CBK’s Weekly Bulletin released on August 29, the state borrowed Ksh916 billion from the domestic market and an additional Ksh334 billion from external sources between June 2024 and June 2025.

The surge in debt pushed the total public debt stock to Ksh11.81 trillion by June 2025, representing 73% of the estimated 2024 GDP of Ksh16.2 trillion. The new debt alone amounted to 7.7% of GDP.

Kenya’s debt ceiling was repealed in 2022 in favor of a debt anchor set at 55% of GDP in present value terms, but current levels have far exceeded that threshold when assessed in nominal terms.

According to the report, banking institutions remain the largest holders of government domestic debt (45%), while pension funds and insurance companies also maintain exposure, raising systemic concerns.

Pending Bills Rise to Ksh 104 Billion

Pending government bills surged by Ksh104 billion between April and June 2025, reversing months of progress in clearing verified dues despite efforts to reduce arrears.

Data from the National Treasury shows that outstanding pending bills by the national government rose to Ksh525.9 billion at the end of June, up from Ksh421.6 billion in March.

Previously, the arrears—mostly owed to suppliers and contractors—had fallen by Ksh118 billion from Ksh539.9 billion in December 2024 as the government began clearing verified dues, starting with the road sector. However, the recent increase threatens efforts to unlock billions of shillings in liquidity into the economy.

“The outstanding pending national government bills as of June 30, 2025, amounted to Sh525.9 billion. They comprise Ksh404.3 billion (76.9 per cent) for State Corporations (SCs) and Ksh121.6 billion (23.1 per cent) for ministries, State departments, and other government entities,” the National Treasury said.

“The SCs’ pending bills include payment to contractors/projects, suppliers, unremitted statutory and other deductions, pension arrears for Local Authorities Pension Trust, and others.”

The pending bills had previously declined by Ksh118.3 billion after the Treasury authorised ministries and State departments (MDAs) to pay verified arrears.

By May 2025, the pending bills verification committee had cleared Ksh578 billion out of the Ksh663 billion submitted. Of the verified amounts, only Ksh229 billion was certified for payment, including Ksh80 billion for road projects.

Mbadi Approves Unified Account To Curb County Funds Misuse. Free Education — Treasury Cabinet Secretary John Mbadi is holding the famous Budget briefcase ahead of the Budget reading in Parliament on Thursday, June 12, 2025. PHOTO/Parliament of Kenya.

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