Most countries - including the UK - have ‘sovereign debt’, borrowing money to invest in public services and infrastructure. However, there are major differences between the UK’s debt and debt in Kenya and other low-income countries. 

The UK’s debts are mainly owed ‘internally’ e.g. to the Bank of England and in pound Stirling, meaning the money stays in the UK economy. In low-income countries debt is mainly owed externally to foreign lenders and banks; the money therefore leaves the country’s economy. Their debts are also owed in US dollars or other currencies, putting them at ‘exchange risk’. These currencies fluctuate in value, meaning if their currency goes down in value, the cost of paying their debt goes up¹.  

You may remember the Jubilee 2000 campaign. It successfully won $130 billion of debt cancellation for 37 low-income countries² - a huge testament to the power of ordinary people around the world. But it didn’t address the structural roots of the debt crisis.  

In the 1980s, private companies offered loans with high interest rates to low-income countries. Unable to repay, many countries faced defaulting (stopping repayments). International institutions like the International Monetary Fund (IMF) and the World Bank stepped in to lend more money to these countries to continue paying their debts. Private lenders’ profits were protected, essentially receiving a bail out and incentivising their continued irresponsible lending. When the Jubilee debt cancellation was won, it was these international institutions that swallowed the loss, not private lenders³.  

Since the 2008 financial crash, recurring shocks including the Covid-19 pandemic, climate crisis and conflict in Ukraine have further exacerbated inequalities and entrenched poverty. In response private lenders have lined their pockets, by offering more loans with high interest rates.  

Kenya was colonised by Britain, displacing indigenous Kenyans by transferring ownership of their ancestral lands to the British Crown. Many Kenyans were forced to work in poor conditions, for low wages, while Britain collected the profits. When the nationalist Mau Mau movement rose up to fight back, the British established concentration camps, torturing, starving, sexually abusing and forcing thousands of Kenyans to complete manual labour. 

In 1963, thanks to Kenyans mass resistance, formal British colonial rule ended. But like other post-colonial countries, they entered a global economy stacked against them. 

Poverty has persisted in Kenya as a result. 

These loans have the highest interest rates and shortest timeframe to be paid off. Most private lenders are little known to the public for example AllianceBernstein, Lord, Abbett & Co and BlackRock are the biggest lenders to Kenya - but very few of us have heard of these companies. 

These loans haven’t led to economic growth, and the Kenyan government has resorted to repaying these loans by borrowing yet more money from the same lenders, entrenching the cycle of borrowing whilst Kenyan people pay the price⁶.  

Like Kenya’s previous external debts, this loan is governed by English law. The UK government can force these lenders to the negotiating table. More on this later.

The UK government therefore has jurisdiction over those eyewatering loans, and the power to force private lenders to renegotiate debts. So far, it’s choosing not to use it.  

That’s why we're calling on the UK government to pass the Debt Relief (Developing Countries) Bill. This would incentivise private lenders to more fairly renegotiate or cancel debts. It would also strengthen legal protections, ensuring countries cannot be sued for repayments.  

Labour’s manifesto said ‘tackling unsustainable debt’ was a key priority. This is an opportunity to uphold these commitments and stop allowing private lenders to put profit before people. And this can all be done at no cost to the UK tax-payer⁷.