A proposed tax hike sparked unrest, but Kenya’s real problem is a debt crisis.
Kenya, one of east Africa’s more economically developed and democratically stable countries, has been rocked this week by a political crisis that reveals the deep cracks in both sides of that stability.
Massive protests broke out earlier this week after parliament passed a bill increasing taxes — including on a bevy of everyday essentials like cooking oil, diapers, and bread — on a population already suffering from inflation and high rates of unemployment.
As protests increased in size and intensity, even breaching parliament’s chambers, they were met with violent repression. Nearly two dozen people were killed Tuesday.
After initial recalcitrance, President William Ruto said Wednesday he would not sign the controversial bill. His decision was a victory for the protesters, but the saga leaves the country’s future more uncertain than ever, both economically and politically.
Ruto requested the bill to cover Kenya’s approximately $80 billion in domestic and external debt. Around $35 million of that debt is owned by foreign creditors, primarily China and powerful international groups like the World Bank and the International Monetary Fund (IMF). If Kenya doesn’t pay it, the possibility of borrowing in the future will become more difficult in the short term; over time, it could mean more unemployment, more poverty, and overall worse outcomes for Kenyans.
Kenya’s troubles are a distillation of the problems facing several dozen developing nations, crushed under debt: “More than 3 billion people across the world live in countries that are spending more on servicing their debt than public spending on education or health,” Binaifer Nowrojee, the president of the Open Society Foundations, wrote in Foreign Policy.
Complicating matters are Kenya’s other economic problems. Corruption, cronyism, financial mismanagement, and the vestiges of colonialism have hobbled Kenya’s once-impressive economic development and exacerbated class and ethnic inequalities.
All of that has led to a long-simmering political crisis: Ruto was elected on a promise that he would improve the lot of Kenya’s youth and lower classes, presenting himself as a break from the old, corrupt, politically incestuous elite. But he’s been unable to deliver, despite the country’s wealth in resources and economic boom in the early 2000s — and that has left large swaths of the population displeased with him, and his government, leading to the rancorous protests of recent days.
Though Ruto has backed off from the taxation bill, Kenyans, especially young people, are mobilized against the government and the status quo — and they aren’t backing down. Protests continued Thursday in Nairobi and other cities despite military patrols. After the bill and the violent repression, some protesters are now calling for Ruto to resign.
Amid serious distrust of his administration, Ruto now must find a way to manage the East African country’s debt load and avoid default without further harming the economy or inflaming people’s very real anger. It’s unlikely he’ll be able to do all of these things. But inaction could drive Kenya further into economic disaster.
Kenya’s Finance Bill of 2024 was supposed to increase government revenue through taxes, satisfying a condition of the IMF loan. But Kenyans already struggling with high inflation and organizing on social media came out in cities including Nairobi, Mombasa, Homa Bay, and Kisumu to condemn the bill after it passed in parliament.
