A MISS OR A HIT

Kenyans are struggling to come to terms with the damage inflicted on their businesses among other sources of income countrywide following the anti-government protests, accompanied by some vandalism and looting. This pressure forced president William Ruto to withdraw his support for the finance bill complicating the efforts to tackle Kenya's heavy debt burden public borrowing which is 68% of GDP higher than the 55% recommended by the World Bank and the IMF. The IMF has however urged Kenya to meet revenue targets to access more funding.

The unpopular finance bill would have aimed to raise $2.7 billion through taxes on items including bread, cooking oil, diapers among others. Kenya is now shifting from raising revenues to cutting spending as Ruto promises to work on austerity measures starting with cuts to the budget of the presidency. Political analyst James Shati said the protests have exposed deeper issues in Kenya. The government is enacting its measures to widen the tax base and those measures are actually stifling or killing enterprises; the same enterprises that employ millions of people. Shik Waatti said Ruto's election campaign message about 2 years ago portrayed himself as a champion of low income hustlers, and this has come back to bite him and that young people are not impressed.

Many activists are afraid that the government will keep on trying to implement tax rises and have vowed to keep calling for Ruto to step down. As Ruto is bowing down to the pressure at home, his government faces pressure from the lenders. If the country fails to raise revenue, its ballooning public debt will continue to grow. In His announcement few weeks ago, Ruto said, sweeping government spending cuts but Global agencies are lowering Kenya's credit rating. Global rating agency move Moody's has further downgraded Kenya's credit ratings to junk territory that means it has reached a level considered a very high risk credit and new rating. Moody's negative outlook for the country increase borrowing costs for the cash to government. Ruto is also facing pressure from the International Monetary Fund which is called for fiscal reforms like increasing taxes in order to access crucial funding. While announcing spending cuts Ruto assured that he will be able to pull the country back from the danger of debt distress, however it is not clear how the IMF is going to respond or how Ruto will walk the tight rope balancing domestic dissent and satisfying lenders, creditors, markets and rating agencies.

In his most recent speech, Friday 19 July, 2024, Ruto opens up on his strategy that hopefully can help change the situation, unemployment among the youth being at its peak. ‘To reduce the cost of living and enhance food security in our country, and together with it to provide requisite raw materials for our Agro, our value addition, our manufacturing and our industrialization agenda, there’s need to expand existing job creation opportunities and programs, and to create new interventions to address unemployment in order to absorb thousands of unemployed young people and provide them with gainful employment opportunities.’ He added, ‘I have consulted extensively on the need to enhance, broaden and deepen the National Economic turnaround plan set out in the bottom up economic transformation agenda to incorporate a wider range of ideas, programs and interventions that will facilitate job creation, robust debt management, enhance transparency and accountability in the use of public resources, and enhance domestic resource mobilization and optimize public expenditure in a manner that gives all of us a chance to live within our means consequently.’

With the changing landscape of political activism in Kenya, is not going to be an easy ride for the political leaders, but all in all opinions matter.