Rating Release
Agusto & Co.’s 2025 Sovereign Rating Report on the Republic of Kenya.
The rating affirmation reflects our opinion on Kenya’s macroeconomic fundamentals underpinned by resilient real gross domestic product (GDP) growth averaging 4.5% over the past five years and a moderating inflationary environment with annual average inflation declining to 4.1% in 2025. The rating also takes into consideration the Country’s expanding foreign reserves and import cover which stood at US$ 12,394 million and 5.3 months respectively, as at 31 December 2025, and the relative stability of the Kenyan Shilling throughout 2025, with the exchange rate averaging Kshs/US$129 supported by stable services receipts and sustained remittance inflows. We have also taken into account the Nation’s relative political calm since June 2025, coupled with ongoing reforms and policy implementations which have supported economic confidence and contributed to stable business conditions. The rating is however moderated by a high debt-to-GDP ratio (67.8%) and rising debt service to revenue ratio (71.2%), which constrain fiscal flexibility and heighten vulnerability to interest rate and refinancing risks.
Looking ahead, Kenya’s economy is expected to sustain its growth momentum, with real GDP projected to expand by 5.6% in 2026, supported by resilience in agriculture, continued recovery in construction and mining, and robust growth across the services sector, particularly financial services, transport, information communication technology and tourism. While downside risks persist, notably from elevated debt service pressures, global commodity price volatility and climate-related shocks, the Country’s strong macroeconomic fundamentals and policy support provide a stabilising backdrop. In addition, the government initiatives to monetise selected state-owned assets, including the planned divestment in Safaricom Plc – selling a 15% stake to Vodacom Group at circa $1.6 billion (Kshs 204 billion) – and reforms around other public enterprises, are expected to support liquidity, reduce financing pressures and create fiscal space for priority infrastructure investment. Moreover, strengthening diplomatic and trade relationships with key partners including the G7, continued openness through visa-free travel initiatives and improving capital market performance enhance investor confidence and medium-term growth prospects. Thus, we attach a stable outlook to the Republic of Kenya.
