The travesty and double speak from the Kenya Kwanza Administration

In July 2022, within the election frenzy, President Ruto promised to fix the economy and bring down the cost of living within 100 days. 

He won and assumed power but as the economy spiralled down, he together with his Deputy, Rigathi Gachagua, pleaded to be given two years to stabilize the economy.

These promises included economic stabilization within 100 days of taking office, but now, nearly two years later, the anticipated improvements remain elusive.

Economic Promises and Reality: 

President Ruto, shortly before and after his election, in pushing forward the hustler narrative clearly stated that part of his administration’s agenda was to make business credit available and affordable, to small-scale traders who, in times gone by, were at the mercy of loan sharks.

As things stand today, the government has continued to borrow heavily from the local markets squeezing out the same small-time traders. Then this has been negatively compounded by the Central Bank of Kenya (CBK), which has set the Central Bank Rate (CBR) rate at 13 percent signalling expensive loans ahead. The small-time traders have been effectively squeezed out of the table.

The “Hustler Government” had promised “hustlers” a weird kind of utopia -- a coming regime of interest-free loans, money without cost. However, with time, Kenya Kwanza luminaries saw the light, then they doubled back on earlier promises of interest-free money and informed the hustlers as much.

They promised a “Hustler Fund” that would avail money attracting low interest rates to boost business but there was another small problem, the amount that would be accessed at first would only be Ksh.500.

Over time, one would have to build credibility to access higher amounts. As many as 22,788,294 Kenyans have joined the Hustler Fund. However, the Hustler Fund is now leading the queue on default on payment at a higher rate beyond banks, microfinance banks and Saccos with a 29 percent default rate. It would be safely assumed that a lot of the hustlers took the money for consumption.

Affirmative Action and Taxation: 

President Ruto promised in March last year that they were putting the final touches on a bill on affirmative action and that it had received overwhelming support from a majority of the members of parliament and it would be processed within the coming one, to one and a half years. 

He reiterated that having the necessary affirmative legislation in place would enable more women join the ranks of leadership, especially in parliament. As time goes by there is no mention of the same, the time promised is here and with nothing to look forward to.

Again in March last year, a tax weary and inflation hit Wanjiku (ordinary Kenyan) was promised by the President that from June 2023, the 8% tax levied on cooking gas would be removed to enable cooking gas be more affordable.

Indeed, the VAT charged on cooking gas was removed in April 2024 by signing into law of the Statute Law (Miscellaneous Amendments) Bill 2024. The President also promised, amidst ululations, that the cost of cooking gas would be reduced from around Ksh.2800 down to Ksh.500 or Ksh.300 by June 2023. To date, the price of gas has remained more or less the same. Who once said a promise is a debt?

Illegal cooking gas filling firms were put on notice and told to ship out of town. What Kenyans might remember now is the painful catastrophe at Mradi area in Embakasi area in February this year, where a gas explosion resulted in over 12 people dead and over 250 people left with serious injuries. 

Ever reactive, the government was breathing fire down the backs of those perceived to be responsible and promising an overhaul of the sector to ensure safety. The accused are in court, the dead are buried, the sick are bearing the brunt of costly treatment and the settlement is decimated; but the sector remains loosely regulated.

On May 11, the National Treasury revealed that it anticipated the removal of bread from the tax exemption commodity list and proposed a 16 percent VAT tax on it. This sparked a great uproar among Kenyans especially on the social digital spaces and on the streets.

Other items of immediate interest to Wanjiku being targeted by the KK administration on increased taxes are VAT charges on banking transactions, increasing charges on mobile money transfers and airtime, and increasing data charges. This move has elicited strong emotions and utter disbelief among struggling Kenyans who thought the “hustler” government might relent.

Bread is akin to ugali, Kenya’s staple food and it is on most breakfast tables across the country even as MP Kuria Kimani attributed its consumption to an increase on diabetes, might the government know something they have not told the public? 

For a long time, fuel prices have been on the rise, the cost of kerosene which the Kenya Kwanza Administration found at Ksh.127.94 shot up to Ksh.203.06 per litre in January this year although it is now at Ksh.168.76. 

The fuel prices shot up overnight because the incoming Kenya Kwanza Administration removed fuel subsidies instituted by the previous administration and boldly said they were not going to subsidize consumption, maybe production.

They also increased the VAT charges on fuel to 16 percent up from eight percent. Coupled with international factors beyond their control fuel reached new heights of over Ksh.217 in October 2023, the highest ever seen. Transport became costly and with it high inflation. The government coyly had to re-employ a subsidy program to cushion heated prices at the pump for consumers. 

The President and his lieutenants have severally told Kenyans to tighten their belts as the tax “pain” is necessary to steady the ship. But even as taxes are on a spiral upward, there have been seemingly contradicting actions to the cause. 

Government Spending and Public Reaction:

Despite advocating for austerity, the administration has increased budget allocations to high offices and maintained high costs for maintaining advisory units and Chief Administrative Officers. 

The recent increased budgetary allocations to the offices of the President, the Deputy President and the Prime Cabinet Secretary, all put together from an initial Ksh.810.29 million to a whopping  Ksh.2 billion stands out as a case in point. 

The Deputy President, Rigathi Gachagua, has come out to say his official residences in Nairobi and Mombasa have suffered neglect and needed refurbishment.

What many observers are asking however is; are the refurbishments more important than the school children feeding program that the National Treasury has axed from State funding? For an administration that endeared itself to the populace by saying it will take care of the downtrodden “hustlers”, these actions have come to speak louder than words.

In March this year, it dawned on Kenyans that it will cost them around Ksh.10 million to keep a Chief Administrative Officer (CAS) in office; many of them are political backwashes who were on the right side of the tide of the general election in 2022. 

A monthly salary for a CAS is capped at Ksh.780,000 and to add on to this basic salary shall be other allowances involving travel, medical cover, pension, group personal accident cover, car loans and mortgages, daily subsistence allowance when on journeys out of town which all amount to Kshs.46.8M for the duration of five years. Many Kenyans are asking where is the value for money in this.

Taxation and Public Trust:

President Ruto, while giving his speech earlier this week at a meeting with Harvard University students at State House Nairobi, shared his vision to lift Kenya’s present tax rate to at least 20 to 22 percent by the end of his term. 

President Ruto said “Kenyans have been conditioned to think that they pay the highest taxes but empirical data shows that as of last year (2023), our tax as a percentage of our revenues is 14 percent,” he said.

It therefore came as no surprise when the U.S. Ambassador to Kenya, Meg Whitman, said the government had mixed up priorities by seeking to take up taxation levels from 14 to 22 percent by 2027 yet what is required is constancy within the policy level for economic stability. She agreed with the notion of expanding the tax base in the country as opposed to overburdening the same small formal sector employees. She proposed facilitation by the government for the creating of quality jobs.

MP Kuria Kimani, chair of the parliamentary budget committee, when asked why there was a sustained rise in taxes, he said “The saddest thing is that 20% of Kenyans pay taxes for 80% of the population… if everyone is paying taxes we shall all be happy.” Kenyans, we want to be happy? We should all pay taxes.

The President’s aggressive tax policies have earned him the nickname "Zakayo," a reference to the biblical tax collector Zacchaeus. While Ruto embraces this comparison, citing the necessity of tax collection to fund government operations and reduce debt, tax experts argue that the government should demonstrate transparency and accountability in its spending to gain public trust and compliance.