Tighten your belts: DP Gachagua on arresting high cost of living

Rigathi Gachagua

Deputy President Rigathi Gachagua.

Photo credit: Joseph Kanyi | Nation Media Group

Kenyans will have to tighten their belts for hard economic times for long after it emerged that the government is broke worsening the current high cost of living.

Despite unveiling a juicy manifesto on June 30 and making flowery promises on the campaign trails, President William Ruto has been hit with the economic reality of the country, throwing him into disarray as far as implementation of his pledges are concerned.

Deputy President Rigathi Gachagua has come out to plead with Kenyans to be patient with the Kenya Kwanza administration as it finds a way to arrest the high cost of living which they had promised to tackle immediately after being sworn-in.

According to the country’s second in command, the administration of Uhuru Kenyatta handed them a dilapidated economy with the National Treasury having no money to enable them move with speed to implement their campaign promises within 100 days in office.

“We have inherited a dilapidated economy. We have found empty coffers. There is barely any money in this country and we are starting from scratch. I have asked the people of Kenya to be patient with us because we have a plan but it cannot be immediate because we have found a bad situation in terms of the economy,” said Mr Gachagua on Sunday during an interview with NTV.

He added: “When we were campaigning, we didn’t know that the situation was so bad until we came to the government, we got the National Treasury Cabinet Secretary with his officials and provided us with the balance sheet to see how we look, we found the stores were empty.”

The DP described the country’s economic situation as ‘very bad’ saying that if President Ruto had not taken bold steps to suspend the fuel subsidy, the situation could have worsened further.

“The situation is very bad. With the previous administration having gone on the way they were going with fuel subsidies, another six months, we would have had an economic shutdown. That is why the President took a very bold decision that the fuel subsidy using Sh20 billion every month was not sustainable,” said Mr Gachagua, adding that the tax the government collects now goes into paying salaries.

The revelation by the country’s second in command means that Kenyans will have to wait longer to know whether the current regime will make life easier for them or the situation will deteriorate further.

Dr Ruto during the campaigns touted initiatives targeting the poor, women, youth, small-scale traders and incentives for manufacturing, agriculture and other key economic drivers.

Within his first 100 days in office, Dr Ruto pledged to arrest the high cost of living and establish a Sh50 billion Hustlers’ Fund but with the current situation, the timelines of fulfilling these promises will have to change.

Despite lowering the cost of fertilizer to Sh3500 per 50-kilograms bag, this is contrary to the campaign pledge of Sh2500 with agricultural experts arguing that productivity cannot increase with cheap fertilizer and expensive fuels.

In the latest monthly review by the Energy and Petroleum Regulatory Authority (Epra), Super Petrol is up by Sh20.18 to retail at Sh179.30 per litre in Nairobi.

Diesel is up by Sh25 to retail at Sh165.00 per litre while Kerosene is up by Sh20 to retail at Sh147.94 per litre.

But Mr Gachagua argued that subsidizing production is beneficial to consumers unlike in consumption where there is no return noting that their economic interventions will work out.

“You subsidise fertilizer to increase maize production to lower the cost of unga. That is pragmatic leadership but just saying that you want to subsidize unga, for how long can you do it? It is not sustainable and you are doing it at the expense of development,” he said.

“I want to tell the people of Kenya that all is not lost. We have now a new President who knows what he is doing. We have a President who is willing to sit down and get good advice from economists and other professionals. Right now, there is no money at the Treasury, in another two-three months, Kenyans will start seeing things picking up, already we have 1.4 million bags of fertilizer ready for the short rains,” he added.

The DP said they are on top of the things by looking for permanent solutions arguing that it would be deceptive to continue subsidizing everything while at the end the situation gets out of hand.

“We are looking for a permanent and sustainable solution, it would be deceptive to continue subsidizing the fuel only for a short while and have an economic shutdown.”

“We know that we promised to bring the cost of food down, but we have not broken those promises. We are on it. It may not be as fast as we may have wanted, because we really did not know the real position at the National Treasury,” DP Gachagua said.

He also assured Kenyans that the tax agency will no longer criminalise their businesses but rather be friendly as an impetus to the culture of paying taxes.

“We have been talking to the Kenya Revenue Authority (KRA) and we have told them that we must agree on how to change our tax regime. We must be friendly to the taxpayers so that we collect more voluntarily. Let us not criminalise tax collection. Progressively, we are going to have an increase in the tax collection and increase production of our agricultural communities and in another 90-100 days, the economy will start feeling the effects of good management,” said DP Gachagua.

The DP said the Kenya Kwanza is focused on digitalizing the tax collection in order to seal the loopholes which leads to shortfalls in the collection.

“We are going to go digital with our taxes so that we seal the loopholes and pilferage. The tax collectors must have proactive engagements with the taxpayers so that people know it is their responsibility to pay taxes and where they have challenges, it is not criminalized,” said Mr Gachagua

Both Dr Ruto and Mr Gachagua have marshalled his troops in Parliament to rally around their agenda in the just concluded retreat in Naivasha over the weekend.

The reforms, they said, would touch on all sectors, including housing, health, manufacturing and agriculture.