Time to get serious about Kenya’s sickly economy

President William Ruto has bought himself a little more breathing space by not assenting to the Finance Bill, 2024 in its present state. But will he grapple with the real issues facing Kenyans and especially the younger generations who form the majority of our population?

Even though he has refused to assent to the Finance Bill, he could just be kicking one of the several contentious cans down the road.

Some have said my last article two weeks ago was prophetic (‘Could over taxation be the tipping point for Kenya?’ Sunday Nation June 16). But I would like to concentrate on what I was really trying to get at.

True, the proposed tax measures contained in the then Finance Bill were excessive, oppressive and so ill-thought out that they would have helped stagnate — if not even shrink — our sickly economy.

Whilst there have been some changes, the overall thrust of the plan will still be to extract more from all of us via direct and indirect taxation, and even worse, give little or nothing extra of any value in return for those taxes. I refer to the word ‘value’ in terms of actual goods and services, not money.

Expensive travel trips

In fact, Kenyans get very poor value for the taxes they pay and I fear that this trend will continue, especially if the government extravagance continues, including a multitude of expensive travel trips, overpriced refurbishment of official residences, inefficient basic services and corruption. We all watch aghast as some of our politicians donate bundles of cash at functions.

Kenyans are feeling overwhelmed and increasingly stressed by their deteriorating circumstances. No one condones lawlessness but when anger tips over it is a result and a by-product, not a cause.

There is also fear that various levels of anger are spreading far and wide through all age groups and ethnic communities. And remember there are many Kenyans, indeed millions, who are feeling dispossessed. What we have seen so far is the tip of the iceberg.

So what is the way forward? It should be a bold, transparently clean new economic order that will foster confidence, economic growth and increased commercial activity, loads of domestic and international investment and in turn create many more jobs. Now that is an exceedingly tough call for this administration as it is.

Unfortunately, it lacks credibility. And as things stand the economy is stagnant, arguably shrinking, investment is in many cases declining and jobs are being shed left, right and centre. Indeed, the country is in a state of economic seizure. So what is needed to stabilise this economy and indeed country and get everything going again?

Leadership must rejig

First and foremost the leadership must rejig and indeed reform its whole approach and work hard to show it is genuinely going to change and build public confidence.

At the moment we are seeing lots of talk and promises but on the ground brutality and intolerance and flashy business as usual for that ever-shrinking political elite.

At the heart of the matter is the economy and its ever-precarious state. When one takes into account inflation, and corruption — which eats 2 to 3 per cent economic growth, talk but no walk, this country is economically stagnant.

President Ruto can refer to Eurobonds and so on but that is building on the mountain of borrowed money and not real economic growth. Growth and enhanced economic activity bring jobs and that is the heart of the matter. We are a sea of massive unemployment or underemployment with a little island of ‘haves’ in the middle of it.

Many of our Gen-Zs are educated and articulate but unemployed. They are unemployed because there is a dearth of opportunities, not because they do not want to work.

They are a microcosm of what Kenya is all about today.

And remember the mass of our young underclass who reside in the numerous slums around the country are unemployed or scraping a few shillings from scraps of work.

Last but not least, what is taking place is putting people off Kenya big time. Tourists would probably think twice about coming to Kenya. Internationally, the Ruto administration has attracted the attention of other governments and world bodies— including the United Nations and African Union — over the handling of recent protests.

Robert Shaw is an economic and public policy analyst:[email protected]