Wednesday February 21, 2024 {HMC} Kenya’s government says it is committed to building the economy by increasing revenue collection, reducing government spending, and ensuring the country is able to repay its debt and live within its means.
The government announcement comes days after the African Development Bank, in its outlook report for 2024, said many nations continue to grapple with higher commodity prices, citing weak domestic currencies and slow economic activities in countries that import more than they export.
The financial institution warned that the high cost of essential food items in some African countries like Angola, Ethiopia, Kenya, and Nigeria will likely cause civil unrest.
Speaking to journalists Wednesday, Kenyan President William Ruto said his government has done just enough to reduce the economic burden on Kenyans.
“The strategy we have put in place over the last one year has seen the cost of living come down, whether you talk about the cost of food, whether you talk about inflation, and what we have done with the management of the debt situation in the country,” he said.
Ruto blamed the previous government for burdening the country with foreign debt and failing to collect enough revenue to balance the country’s accounts.
The government removed fuel subsidies which were meant to cushion Kenyans from the high prices of food as part of its economic reform agenda. That reform, the African Development Bank said, could cause unrest.
According to AfDB research, 19 African countries recorded double-digit inflation rates last year. Earlier this month, The Central Bank of Kenya’s Monetary Policy Committee warned citizens to brace for high food prices due to soaring inflation and expensive imports because of the depreciation of the local currency.
Kenya has also witnessed protests over high food prices, but people continue to express their displeasure with the country’s economic status in public gatherings and on social media networks.
Samuel Nyandemo, economics lecturer at the University of Nairobi, says some Kenyans are losing patience with Ruto’s 18-month-old government.
“Kenyans, their patience is eroding unless some of these issues are addressed with urgency. There will be some animosity whether you like it or not,” Nyandemo said. “You can even see it in political meetings. People are now so courageous they are shouting at the president. What does that show you? It shows you that people are getting disgusted. We better start addressing key issues first and the first thing is reducing the cost of living.”
Kenya’s government says it has managed to lower food prices, and the economy is improving despite spending much of its revenue repaying loans.
Ruto says Kenya needs to reduce its reliance on food imports to strengthen the currency and reduce food prices.
“The 500 billion Kenya shilling we spend every year to import food into Kenya will only go down the day we produce that food in Kenya. That’s a step we are taking and we made a commitment as a government that we want to reduce imports by 50 percent in the next five years,” he said.
Nyandemo the economist says the shilling’s loss of value against the dollar and other currencies will impact the country’s food prices and economy.
“All macroeconomic valuables have shown red lights. We should not be fooled that the shilling is going to stabilize soon. A shilling cannot stabilize because of some mischievousness through the Euro bond,” Nyandemo said. “I think it is a short-lived phenomenon. And as long as the shilling is not going to be stable, as long as the interest rates are going to be very high, businessmen are not going to be able to source loans for investments. In any case, you can see from the Kenya Revenue Authority the revenue being collected is not in line with the targets.”
Africa’s economic growth is expected to grow at 3.2 percent. The African Development Bank urged African countries to build resilience in a world of rising uncertainty and geopolitical competition.
SOURCE VOA
