When Linzi FinCo rang the bell at the Nairobi Securities Exchange (NSE) to mark the listing of its KSh 44.7 billion infrastructure bond, it was framed as a watershed moment for Kenya’s capital markets. The bond, issued to fund the construction of the Talanta Sports Stadium, was celebrated as a triumph of financial ingenuity, a signal that Kenya could still dream big, even in the shadow of debt distress.

But behind the polished press statements and photo-ops lies a more sobering reality. The Talanta bond is not just an innovation in infrastructure finance; it is a potent symbol of a more profound transformation: the quiet expansion of public debt under new disguises. What we are witnessing is infrastructure by another name, and debt by different route.

With official debt levels now hovering around KSh 12 trillion and the country’s debt-to-GDP ratio inching toward 71%, Kenya is approaching a fiscal inflexion point. Latest data from the National Treasury indicate that debt servicing alone is now consuming more than 60% of ordinary revenue. These are not signs of a country with ample borrowing headroom, but rather signals of a nation borrowing against its future.

Infrastructure bonds, such as Linzi FinCo’s, offer a tantalising escape hatch. The issuance of debt through a special-purpose vehicle (SPV), rather than the Exchequer, allows the government to circumvent direct borrowing limits, avoid parliamentary scrutiny, and push fiscal obligations off its formal balance sheet. It does look smart, but it also creates a new category of quasi-public liability that is real, binding, and deeply political.

Proponents argue that the bond is backed by projected revenue from the stadium itself: gate collections, event rentals, naming rights, and auxiliary commercial activity. However, this assumption warrants scrutiny, as our track record with revenue-generating infrastructure is, at best, mixed. The Standard Gauge Railway (SGR) was projected to generate profits within five years, but now operates at a loss, surviving on opaque Treasury support. Several counties have built stadiums that now sit idle, overgrown, and underutilised. There is little in the public record to suggest Talanta Stadium will be any different, particularly without a detailed feasibility study, a published revenue model, or third-party stress testing of investor returns.

The more troubling element, however, is what this new financing model signals about the evolution of Kenya’s fiscal architecture. It marks a departure from traditional state-centred accountability into a murky zone of hybrid debt: neither fully public nor credibly private. It is, as Professor Attiya Waris warned in a 2022 United Nations Human Rights Council (UNHRC) address, “fiscal decision-making behind the veil of legality, without due consultation, and full transparency.” The bond may not carry a sovereign guarantee, but the political reality is that no government can afford to let a high-profile project like Talanta collapse. If revenues fall short, and they potentially will, bondholders will expect intervention in the form of liability.

In financial terms, the issuance might not technically breach Kenya’s debt ceiling. But in governance terms, it deepens what Waris has termed “the shadow fiscal state”, where public risk accumulates silently in SPVs, guaranteed leases, and performance-based PPPs that escape conventional scrutiny. The public is none the wiser, yet the burden is eventually theirs to bear.

Indeed, Kenya’s pivot to market-based infrastructure financing may offer temporary liquidity relief, but it comes at the cost of long-term fiscal transparency. Bond issuance via vehicles like Linzi FinCo is not merely a funding decision; it is a political act that shifts the locus of accountability away from Parliament and toward unelected technocrats and institutional investors. The irony is that while the National Assembly debates marginal tax rates for boda riders and bread, billions are being raised and spent outside its reach.

Globally, countries that have successfully issued infrastructure bonds, including Chile, Colombia, and Rwanda, have done so through careful institutional scaffolding: independent credit ratings, ring-fenced revenue streams, enforceable covenants, and binding audit mechanisms. Kenya, by contrast, operates without a clear legal framework for SPVs, lacks a central registry of contingent liabilities, and has unclear rules on what constitutes de facto public debt. In this legal and policy vacuum, innovation risks becoming improvisation.

The absence of full disclosure on the Linzi FinCo bond is particularly telling. Who are the principal underwriters? What are the yields offered to investors? Are there embedded state guarantees, and if so, under what conditions do they trigger? What revenue assumptions were used to justify the issuance? And most crucially, how will revenue be collected, safeguarded, and disbursed in ways that are both auditable and equitable?

The opacity is not accidental; it is the point. Operating in a space beyond the formal budget process, these instruments avoid the public scrutiny that accompanies traditional debt debates. They present infrastructure as a self-contained, self-paying fantasy, one that requires no sacrifice, no taxes, no austerity. This is akin to a fiscal illusion as infrastructure never pays for itself without robust governance, equitable access, and disciplined implementation. Growth and development do not occur in a vacuum of policy oversight.

Worse still, the success of the Talanta bond, if defined merely by investor uptake and media reception, may trigger a dangerous replication effect. Already, multiple counties are exploring their SPV-driven bonds, often with weaker institutional safeguards than the national government. Without a coherent regulatory framework, we risk a fragmented borrowing landscape where national and subnational entities rush to issue infrastructure bonds, each drawing down future revenues and adding to the country’s hidden fiscal exposure.

To restore credibility, we would need to act urgently to rebuild its fiscal governance structures. The Public Finance Management Act must be amended to account for all forms of public obligation, explicit and contingent. Perhaps the National Treasury needs to clarify its oversight of infrastructure-linked SPVs. The Auditor-General should also have a role in this matter. Fundamentally, no infrastructure bond should be floated without an independent feasibility study, a binding social cost-benefit analysis, and a published debt servicing schedule. Revenue from such projects should also be appropriated within the confines of the Public Finance Management Act, 2012.

The NSE may be the right platform to bring infrastructure finance into the daylight, but without structural reform, it risks becoming a theatre for fiscal evasion rather than discipline. If capital markets are to finance development, they must also be held to standards of democratic accountability. The fiscal burden they help to shift must not be a burden they help to obscure. The Talanta Sports Stadium may very well rise from Nairobi’s soil. Its steel and concrete may glitter on match days, however, if financed in silence, repaid in secrecy, and governed in opacity, it will stand not as a monument to progress, but as a warning of how fiscal illusion can masquerade as infrastructure.