“Enslaved and supported by foreign interests, and never pro-people in its outlook and interests, Ruto’s administration was bound to face the consequences of its priorities,” Willy Mutunga, Kenya’s former chief justice, told Reuters.
Massive protests broke out after the parliament passed the new Finance Bill on 25th June highlighting increasing taxes on essential items in an economy already struggling with soaring prices and high rates of unemployment.
According to BBC, the bill initially proposed a 16% sales tax on bread and a 25% duty on cooking oil, along with a new annual tax on vehicle ownership accounting to 2.5% of the value of the vehicle.
With this, the bill levied a charge on products that contribute to e-waste production, and taxes on plastic imports. This was later withdrawn and William Ruto, President of Kenya, said his administration will work on austerity measures, beginning with cuts to the presidency’s own budget.
Within the Finance Bill, tabled by the National Planning Committee of the National Assembly on 13th May, the government doubled the value-added tax (VAT) on fuel products to 16%, and introduced a 1.5% housing levy on employee’s pay.
The levy is expected to be directed to funding the construction of houses for economically weaker individuals and generate jobs in the process.
Alongside this, turnover tax also tripled to 3% for small businesses, and income tax was raised from 30% to 35% for high income earners.
Start of the Protests
The protests began online with the youth advocating against the tax hike and changing financial laws. According to the Center for Strategic and International Studies, this movement has been called “Gen Z’s protests”, as younger Kenyans spearheaded the action, sharing valuable information and educating the people on what the new Financial Bill entails.
Protesters opposing the increase in taxes stormed the parliament on 25th June, burning part of the building as lawmakers fled. As a result, the military had opened fire and protests took a violent turn, as reported by The Associated Press.
Human Rights Watch further reported increasing cases of arbitrary arrests, killings, enforced disappearances, and abductions taking place, raising alarm bells for the democratic and human rights of the people.
Though the 2023 Finance Bill was equally unpopular among the public, outrage grew as the 2024 Finance Bill brought with it taxes on essential items and services, including sanitation products, housing, cars and others.
Kenya’s government previously said these tax hikes were necessary to service the massive public debt. When President Ruto entered office in August 2022, Kenya was already in crisis as it incurred a $62 billion debt.
Inflationary pressures due to COVID-19 and supply chain disruptions increased the debt. As of July 2024, the debt has reached approximately $82 billion, equal to roughly 70% of Kenya’s GDP.
International Debt
In 2021, Kenya entered into an agreement with the International Monetary Fund (IMF) to recover from COVID-19. This came in the form of a 38-month programme that the IMF said would help Kenya recover its debt and promote private-sector investment.
However, the IMF conditioned its loans on hiking taxes, reducing subsidies, and ensuring minimum government spending.
The IMF’s conditions have been compared to the failure of Structural Adjustment Programmes (SAPs) implemented in Africa in the 1990s as a response to the debt crisis.
These programmes formulated by the IMF and the World Bank aimed to address high external debt levels and low economic growth through privatisation and tax hikes.
Evaluation and criticism of the SAPs highlighted that the intended benefits of the programmes were outweighed by increasing inequality and poverty. Today, Kenya finds itself in a similar predicament with the conditions recently put forth by the IMF.
Protestors specifically blamed the IMF for the most recent tax hike and some said that the government has surrendered to the IMF.
In response to these protests, the IMF has stated that it is committed to working with Kenya to chart a course towards robust, sustainable, and inclusive growth.
On July 11, the IMF said that strengthening tax capacity is essential for Kenya’s development to facilitate economic growth. Moreover, it said that with significant revenue going towards debt service, Kenya needs to mobilise even more revenue to meet the country’s needs.
According to Reuters, Kenya will now need to submit a new revenue plan to the IMF as the bill’s withdrawal is likely to result in Kenya missing targets in its IMF programme.
President Ruto signed into law a supplementary appropriations bill to align with the expected fall in revenue. As reported by BBC, this bill would reduce government expenditure by $1.2 billion.
Causes and Effects
Although the short-term cause of these protests is the hike in taxes, political unrest has been brewing in Kenya for a long time.
This is due to Kenya’s other economic problems such as corruption, cronyism, financial mismanagement in terms of increased spending and borrowing, and the impacts of colonialism which has worsened the crisis.
In Sub-Saharan Africa, where Kenya lies, corruption appears to be a social phenomenon deeply rooted in colonisation. The introduction of a monetary tax, the hut tax, a form of taxation introduced by the British for hut dwellers, and later the poll tax was a significant way in which the colonial governments fostered the growth of corruption.
Colonial powers such as the British introduced a compulsory tax, payable only in cash, for meeting the cost of administration and generating labour necessary for the establishment of productive activities.
The way these taxes were collected through Sub-Saharan African leaders, along with other financial processes set by colonial powers, laid the foundation for corruption to thrive in the country, as published in Volume 3 of the African Journal of Political Science.
To motivate these leaders to generate as much tax revenue as possible, the colonial regimes allowed them to retain a part of it.
The financial gains from pocketing taxes transformed these leaders into willing agents of colonialism and resulted in the government blinding themselves to the difficulties of their people in paying these taxes.
Here, the larger cause of these protests can be traced back to an economic boom in the 2000s, when the government borrowed heavily to fund its infrastructure projects. The government then failed to invest these loans in a way that would lead to economic growth.
This is seen in Kenya’s two failed dam projects which cost the country £80m in insurance premium payments financed from borrowed money without ever being built, as reported by The Guardian. The COVID pandemic, ineffective taxation strategy, and a long-term pattern of government overspending escalated the debt.
The protest has evolved into a wider campaign for more accountable governance in the country as it faces deep corruption and unsustainable foreign debt. The Corruption Perceptions Index by Transparency International currently ranks Kenya 126th out of 180 countries.
A report in March of 2024 by the Office of the US Trade Representative said corruption is a significant barrier to doing business in Kenya. This has significantly impacted Kenya’s economic growth.
The current president, William Ruto, was elected in 2022 largely owing to his promises to bring reform to Kenya. His focus on improving Kenya's youth and lower-classes with policies such as increased spending on training presented him as a break from old and corrupt leaders.
However, his inability to deliver on his promises has caused a significant portion of the population to lose faith in his administration.
Despite promises to boost economic growth and bring significant reforms, Ruto’s tenure as President has seen soaring prices alongside increasing taxes.
Ruto argues that tax hikes are essential for the government to increase revenue which is needed for debt management and to increase development, but it has made life tougher for the poorest Kenyans.
Although Ruto announced that he wouldn’t sign the bill on 26th June, in effect withdrawing the bill, the government's violent crackdown on protests leading to numerous deaths, along with growing mistrust in the current administration, protesters demanded President Ruto’s resignation.
As a result of the protests, on 11th July, Ruto dissolved his cabinet. Ruto promised to replace the former cabinet with a government of national unity.
He told fellow citizens he would engage in dialogue with all sectors of society and set up a “broad-based government”.
As this new cabinet was being sworn in, the police hurled tear gas at protestors calling for the President’s resignation during the ‘Nane Nane’ march on 8th August, as reported by Al Jazeera.
Aspiring Recovery
The protest has fuelled extreme distrust in the government; protestors chanted “Wezi” (thieves) as they pushed into the parliament building. This is the most intense crisis to confront the government of President Ruto. As reported by BBC, protestors have publicly stated that they feel betrayed by the President.
The primary purpose of the tax hike was to service Kenya’s high debt as it experiences pressure from the IMF to increase government revenue. Despite the President having withdrawn the Finance Bill, tensions over the dire economic status in the country continue.
Protestors are working to sustain the momentum of their protests until their demand for the President’s resignation is met.
As the protests continue into their second month with the ‘Nane Nane’ march on 8th August, the youth have vowed to continue fighting to “take their country back,” as job insecurity, inflation, and national debt leave their futures uncertain.
The question is how Ruto will respond to the demands of the IMF and tackle the debt crisis while addressing the dissenters’ concerns.
Kenyans want Ruto to deal with corruption, mismanagement of public funds, and step down. Ruto’s decisions in the following months will shape Kenya’s socio economic landscape at least for the near future.
Edited By Veda Rodewald and Thenthamizh SS
Ishika Jain (she/her), an International Baccalaureate student and writer at Political Pandora, has a keen interest in examining how economic policies and actions impact individuals and societies.
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