A loan by the Israeli government will fund nearly 70 percent of the development budget of the Ministry of Defence in Kenya for the fiscal year 2025/26, disclosures by the Treasury show.
Budget estimates for the financial year starting Tuesday show that Israeli will directly fund Kenya’s Defence ministry through a Sh3.4 billion loan—which would be equivalent to 69.38 percent of the ministry’s development budget of Sh4.93 billion for the fiscal year 2025/26.
The development budget is, however, only a small portion of the ministry’s total budget of Sh200.32 billion for 2025/26, which includes both recurrent and development expenditures.
“In the upcoming medium-term expenditure framework (MTEF) period (2025/26 – 2027/28), the Ministry [of Defence] will continue its modernisation agenda to enhance force protection, mobility, and sustainability,” said the National Treasury.
“Efforts will also focus on supporting universal health coverage, affordable housing, project implementation, research and development, and strengthening the capacity of the Ministry’s civilian workforce,” it added.
This is not the first time the Israeli government has financed the Defence ministry in Kenya.
Last year, the Middle Eastern country granted the ministry a Sh1 billion loan to acquire an advanced air missile defence system called the Spyder (Surface-to-air Python and Derby) developed by Rafael Advanced Defense Systems in Israel.
The Spyder is a low-level surface-to-air missile system designed to counter attacks from aircraft, helicopters, unmanned aerial vehicles (drones), and precision-guided munitions.
Kenya is seeking to further modernise its military capabilities in the face of civil wars in neighbouring countries.
The Treasury has also highlighted that in the 2025/2026 financial year, the government is set to repay the Israeli government Sh48.17 million as interest and Sh811.38 million on its external redemptions of the loans.
External debt redemption refers to the process where a borrower, typically a country, repays or settles its outstanding obligations to foreign creditors. This can involve repaying the principal amount of loans, bonds, or other forms of debt. It can also include early redemption, where debt is paid back before its original maturity date.
The spending plan tabled in the National Assembly indicates that during the last three financial years ending June 2024, the Ministry of Defence spent Sh431.6 billion from Sh434.7 billion allocated.
Other countries that have financed the Defence Ministry through the issuance of loans are the Netherlands (Sh310.6 million) and Italy (Sh5.9 billion) in the financial year 2020/2021.
“During the review period from 2021/22 to 2023/24, the Ministry received allocations of Sh136.7 billion, Sh138.9 billion, and Sh159.1 billion for the financial year 2021/22, financial year 2022/23, and financial year 2023/24 respectively. The actual expenditures were Sh134.5 billion, Sh138.9 billion, and Sh158.2 billion for the respective financial years, reflecting absorption rates of 98 percent, 99 percent, and 99 percent, respectively,” added Treasury.
“Key achievements during this period include: safeguarding national sovereignty and territorial integrity; successful execution of multi-agency security operations; development of operational, training, and welfare infrastructure; acquisition and upgrading of systems and equipment; promotion of international and regional peace initiatives; and support for humanitarian and civil activities across the country.”
