By Murungi Ndai
Lately, President Ruto has assured Kenyan’s that he intends to grow the country towards Singapore standards – sighting housing as the starting point. In my normal rounds within Laikipia county, as we were discussing how the Kenyan economy sits, a young economist, maybe curious on Singapore’s economy, paused a question to me, ‘why is Singapore and other developed countries have higher, in fact more than 100% debt to GDP ratio yet here in Kenya ours is barely 67% but we are debt distressed?’ ‘This is an interesting topic of the day!’ I thought to myself as I stood at the podium of the Nanyuki ‘bunge la wananchi’ to explain.
Comparatively, Kenya has a GDP of USD 124.5 billion (2024) and an estimated population of over 53.6 million (2023). On the other hand, Singapore’s GDP stands at USD 547.4 billion (2024) which is more than fourfold that of Kenya but has a small population almost equivalent to that of Nairobi City County.
Singapore has the world’s highest Human Development Index of 0.948 supported by quality health and education that assures better living standards, while Kenya is at 0.628. Geographically, at 580,367 Square kilometres, Kenya is about 830 times larger than Singapore and provides sea access to landlocked countries like Rwanda, Uganda, Burundi, Southern DRC and even Ethiopia. Meanwhile, Singapore acts as a global transhipment and logistics hub where nearly 40% global maritime trade passes through or near the island.
It is also important to note that the Kenyan economy primarily depends on commodity and agriculture-led but slowly shifting to manufacturing, while Singapore economy relies on trade, finance, logistics and technology-led. While Singapore is resource scarce, Kenya challenge is not resource scarcity but rather transforming available resources into wealth through value addition.
When we talk about public debt, the common belief is that countries with lower debt-to-GDP ratios are financially safer. Global comparisons reveal a surprising paradox. Singapore, has maintained beyond 168% debt-to-GDP ratio and is considered one of the most financially stable nations in the world. Kenya, on the other hand, faces debt distress at just 67%.
Cost of credit is one of the key factors that favours Singapore public debt. Due to favourable creditworthiness, Singapore has been able to attract affordable capital as debt. Singapore has one of the world’s best ratings, AAA, while Kenya struggles with a rating of B.
Consequently, Singapore enjoys a savings-to-GDP ratio of 47% while Kenya stands at 14.5%. This basically implies that Singapore has higher domestic liquidity for lending than Kenya. Domestic public debt mix in Singapore stands at 70% while Kenya is at 62% while on average, Singapore pays an interest of 2-3% on her debt while Kenya struggles with 8-13% interest payment. 90% of the domestic borrowing in Singapore is from the Central Provident Fund (CPF).
Foreign exchange volatility exposure is less in Singapore as only 30% of her debt is external and the Singapore Dollar (SGD) is favourably more stable as opposed to Kenya Shillings (KES), with external debt is at 48%.
Perhaps the most critical difference lies in the use of the debt funds. Kenya’s loans often finance to fund budget deficit and is mostly recurrent expenditure—salaries, administrative costs, and consumption rather than production. This creates a cycle where debt grows without generating equivalent returns.
Singapore channels its borrowing into infrastructure, innovation, and investments that stimulate growth and yield future revenue. Essentially, debt becomes a tool for wealth creation rather than a survival mechanism. Meanwhile, Singapore borrowing is guided by the Significant Infrastructure Government Loan Act (SINGA), 2021.
Kenya’s revenue collection to GDP is at 16 – 18% while that of Singapore is at 20-22%. This does not reflect higher taxation but rather efficiency in tax collection guided by controls and compliance. With Kenya borrowing about 45% of her domestic within the commercial banking sector, private lending has been squeezed thus lowering local investments that ultimately affects business performance leading to lower payment of taxes.
According to the Corruption Perception Index (CPI), Singapore scores at 84/100 while Kenya is at 32/100 where 0 being most corrupt. Singapore is one of the least corrupt nations and ranks top 5 globally while Kenya ranks 121st specific to public sector corruption perception.
Corruption obviously affects controls in revenue generation, revenue spending and ultimately drains the country of any available resource while eroding public confidence.
The result of these structural differences is stark. Kenya spends 40% of its total revenue servicing interest payments alone – a heavy fiscal drag that crowds out development spending. In 2024/25 financial year for instance, Kenya collected KES 2.571 trillion as revenues and spent KES 1.72 trillion servicing debt both domestic lenders and foreign creditors – spending 67% of revenue collected to pay interest rates only. On the other hand, Singapore spends only 2% of its revenue on interest because most of its debt is low-cost, long term, domestic, and backed by high savings.
Public debt is therefore not just about how much a country owes, but how much it earns, what it pays in interest, and what it does with the borrowed funds. Singapore’s model shows that high debt, when domestically held and productively invested, can coexist with financial stability. Kenya’s experience, meanwhile, illustrates the real trap – external dependence, volatile currency exposure, domestic borrowing that creates a credit crowding out effect, and debt-fueled consumption.
As Kenya reforms its fiscal policy, the lesson from Singapore is clear: sustainable debt is built on strong domestic savings, disciplined spending, including fiscal consolidation, regaining public confidence through checking corruption and investment in growth-supporting projects not borrowing for survival.
Ndai is a Consulting Partner and CEO at Ecocapp Capital and the immediate former CECM in charge of Finance for Laikipia
