Two contrasting bond stories dominate East African finance right now: Kenya's Eurobond raise, and Tanzania's offshore shilling bond.
Tanzania's fundamentals mean its return to the markets could deliver real impact rather than just debt-servicing.
The bond signals a longer-term strategic shift; an early step in Tanzania's Vision 2050 and Fourth Five-Year Development Plan.
Financial news in East Africa is typically dominated by Kenya, with 2026 so far making few exceptions. In February, President Ruto won plaudits for raising Eurobonds worth US$2.25bn from the international bond markets to finance a debt buyback. However, a quieter announcement from Tanzania that it is considering its own Eurobond issuance tells a more interesting story for investors.
To be sure, Kenya’s fundraising has been impressive. The country has issued US $900 million in seven-year notes at a yield of 8.1 percent and US$1.35 billion in 12-year bonds at 8.95 percent. This has created a trend that is being followed by the Ivory Coast, which has US$1.3 billion 15-year bond at 5.39%, and Benin and Algeria followed by tapping Sukuk markets for cheaper capital. The result has been a real and welcome return for Africa to the global markets brought on by easing interest rates, and a noticeable decrease in risk premiums for emerging and frontier markets.
While Kenya’s deal is important, the pressure to take it on, and the plans for how this money will be used, raise questions about how much long-term transformative power it will have. This is because Kenya has little alternative but to use the money it borrows for budget support and liability management, including buyback offers of up to US$350 million for its eight percent amortising notes due 2032 and up to US$150 million on its 7.25 percent bonds maturing in 2028.
These maturities are approaching at a time when Kenya’s public debt remains elevated. Kenyan Treasury data puts public debt at around 69.5% of GDP as of February 2026, while it was around 67.8% at the 2025 fiscal year, while the IMF continues to assess the country as being at high risk of debt distress. That does not mean default is inevitable, but it does underline the importance of fiscal consolidation, careful liability management and maintaining access to affordable financing as Kenya works to manage its debt burden.
While raising the portion of taxes directed to debt servicing would appear to be one option, debt service already consumed US$3.94 billion against US$4.28 billion of tax revenue in a single quarter of the 2025/26 fiscal year. Raising taxes has also already been tested and ruled out when met with anti-tax protests storming the Kenyan parliament in late June, leading to several casualties in the first direct assault to the government in decades.
Because a substantial share of the new Eurobond proceeds is being directed toward liability management, the transaction is more focused on refinancing existing obligations than on funding new development expenditure. While this may help ease near-term refinancing pressure and smooth Kenya’s debt maturity profile, the country’s elevated debt burden means fiscal and debt-sustainability risks will remain an important consideration for investors.
Tanzania is breaking that East African mould. Tanzania enters this period with a comparatively manageable public-debt burden. IMF estimates put public debt at around 48.5% of GDP in 2024/25, with the ratio projected to decline over the medium term under the baseline scenario. The IMF and World Bank continue to assess Tanzania as being at moderate risk of debt distress, with key debt indicators remaining below applicable thresholds.
This, coupled with the high growth rate of 6% in 2025, demonstrates the ability to focus on investment-led, rather than debt-driven, economic development. Development has been further aided by a low and constant inflation rate, which has held below 5% for close to eight years. This has remained true even during the war in the Middle East, which has pushed neighbouring countries to see inflation rates up to 18.7% in Burundi, 14.8% in Zambia, and 6.7% even in Kenya. Tanzania presents a different picture. With public debt at around 40% of GDP, the country enters this period from a comparatively stable fiscal position relative to several regional peers. The World Bank’s February 2026 Tanzania Economic Update reported GDP growth of approximately 5.8% in the first half of 2025, broadly consistent with growth of around 6%.
That performance has been supported by relatively moderate inflation, which has remained below 5% for several years. While neighbouring economies have faced sharper price pressures, Tanzania’s combination of steady growth, contained inflation and a comparatively manageable debt burden provides a more supportive backdrop for directing new financing toward productive investment.
These fundamentals do not guarantee that new borrowing will translate into stronger long-term outcomes. Much will depend on how effectively capital is allocated, the quality of the projects financed and the government’s ability to maintain fiscal discipline. However, Tanzania’s recent macroeconomic stability may give it greater scope to use external financing for infrastructure, private-sector development and other longer-term growth priorities.
The transaction is IFC’s inaugural offshore Tanzanian-shilling bond, issued at TZS 265.2 billion (approximately US$100 million) and marked at the London Stock Exchange. According to the LSE, it is the largest TZS-denominated issuance to date in international capital markets. The proceeds support a US$100 million-equivalent local-currency financing facility for NMB Bank to expand lending to MSMEs, including women-owned businesses. As Finance Minister Khamis Mussa Omar told journalists in London in June, “The listing demonstrates growing confidence among international financial institutions in our economy and the ongoing reforms in the financial sector.”
This confidence has not come out of nowhere. Tanzania has already confirmed a commitment to financial discipline, through a large portfolio of infrastructure projects which invest back into the country such as the development of the Standard Gauge Railway which has allowed for ease of trade, and the extension and modernisation of ports at the heart of infrastructure in the 2025/26 fiscal year.
Furthermore, the country is working to ensure equity in the distribution of funds made through these new shilling bonds with a portion of the proceeds scheduled to be lent to NMB Bank Plc to expand financing for small and medium enterprises, and twenty percent of the funds earmarked to support women-owned businesses.
Kenya’s Eurobond plan is a measured and strategic response to its current situation; however, it is not the gold standard for how investment must look across East Africa. That is certainly what we are seeing in Tanzania, where the shilling bond is part of a larger development strategy for Vision 2050 and the Fourth Five-Year Development Plan.These long-term plans aim to position Tanzania as a diversified resilient, and competitive upper middle-income economy which can provide a high quality of life and empowerment for all. With these long-term strategies in mind, Tanzania’s shilling bond is a strategic first step towards larger investment in infrastructure, tourism, critical minerals and renewables. Quickly, this could put the country on the path towards currency internationalisation.
With the money that this bond can bring in Tanzania will be able to continue expanding lending to small and medium enterprises, job creation and economic development. This willingness to buy in also tells its own story, signifying investor confidence in Tanzania’s economy and allows access to financing at affordable rates that will serve to promote growth even further.