Kenya’s President William Ruto. The ballooning debt in East Africa’s economic hub of Kenya is expected to grow even more after deadly protests forced the rejection of a finance bill that President William Ruto said was needed to raise revenue.
| Photo Credit: AP

The ballooning debt in East Africa’s economic hub of Kenya is expected to grow even more after deadly protests forced the rejection of a finance bill that President William Ruto said was needed to raise revenue. He now warns “it will have huge consequences.”

Facing public calls to resign, Mr. Ruto has said the government will turn to slashing a $2.7 billion budget deficit by half and borrowing the rest, without saying from where.

After anger over the bloated bureaucracy and luxurious lives of senior officials helped to fuel the protests, Mr. Ruto also has promised funding cuts in his own office and said the funding would stop for the offices of the first lady, the “second lady” — the wife of the Vice President — and the wife of the prime Cabinet secretary. Almost four dozen state enterprises with overlapping roles will be closed.

Mr. Ruto has become deeply unpopular in his two years in office over his quest to introduce taxes meant to enable Kenya to repay its $80 billion public debt to lenders including the World Bank, the International Monetary Fund and China.

The public debt makes up about 70% of Kenya’s gross domestic product, the highest in 20 years.

How Mr. Ruto’s administration will find the money to pay off debt without further angering millions of Kenyans barely getting by, and without slowing down the economy, is the key question. The economy grew 5.6% in 2023.

Economist Mbui Wagacha, a former adviser to previous President Uhuru Kenyatta, said Kenya needs a professional budget and management body like the Office of Management and Budget in the U.S. Currently, Kenya’s treasury makes budget estimates and forwards them to the parliamentary finance committee, which creates the finance bills.

“Parliament has abdicated its mandate on the public finances in the Constitution and it’s looking after its own interests,” Mr. Wagacha said in an interview.

He said further borrowing by Kenya could be “disastrous” and proposed a strategy of using diplomacy to attract investment and restructuring the debt in an attempt to get creditors to write off some of it.

Another economist, Ken Gichinga, agreed that government borrowing will slow down Kenya’s economy. Businesses still haven’t recovered from the effects of the COVID pandemic and the war in Ukraine, he said.

“When the government borrows more, interest rates go up. And when interest rates go up, businesses slow down, the economy slows down, due to the high cost of repayment,” Gichinga said.

Kenya’s President has advocated self-sustainability, saying the country should raise more revenue instead of borrowing. “If we are a serious state, we must be able to enhance our taxes,” he said in May.

But Kenyans have rejected attempts to raise taxes as they struggle with rising prices on basic goods, even storming parliament during the recent protests.

Last week, days after announcing he would not sign the finance bill he once championed, Mr. Ruto said he had worked hard “to pull Kenya out of a debt trap” and that huge consequences lie ahead.

Mr. Wagacha said economic growth must come before the government increases revenue targets and tax collection.

“You create an expanded economy with employment and with investment, and people have money in their pockets. It’s much easier for them to hear about your request for taxes,” he said.

He suggested making access to low-interest credit easier for businesses in key sectors like tourism and agriculture, saying small businesses hold the key to Kenya’s economic growth as they tend to absorb many employees. That could help address high youth unemployment.

The government should incentivize businesses to create jobs with low taxation and lower interest rates, Mr. Gichinga said: “At the end of the day, we need a jobs-centred economic policy. That’s what we’ve been lacking.”

The IMF, which had suggested some of the controversial tax changes, has been a target of Kenya’s public dissatisfaction. Some protesters had posters with messages such as “IMF stop colonialism.”

In a statement late last month, the IMF said it was monitoring the situation in Kenya, adding that its main goal was to help it “overcome the difficult economic challenges it faces and improve its economic prospects and the well-being of its people.”

The IMF needs to do more for Kenya beyond focusing on debt sustainability and be a “strong development partner,” Mr. Gichinga said.

Crowds in Kenya’s capital Nairobi lobbed rocks and looted businesses as police officers fired tear gas in scattered violence during fresh anti-government protests on Tuesday following last month’s deadly demonstrations.

Activists have continued to agitate online against President William Ruto, despite his decision last week to withdraw a controversial bill that triggered what he has branded “treasonous” protests by Gen-Z Kenyans.

The Kenya National Commission on Human Rights (KNCHR) on Monday said that 39 people had been killed and 361 injured during two weeks of protests — with the worst violence occurring in Nairobi last Tuesday — and condemned the use of force against demonstrators as “excessive and disproportionate”.

It is the most serious crisis to confront Ruto since he took office in September 2022 in a nation often considered a beacon of stability in a turbulent region. 

After last week’s bloody chaos, young Kenyans, whose protest movement has no official leaders, called for a new day of peaceful action on Tuesday, with leaflets posted online using the hashtag “RutoMustGo”.

But Nairobi’s central business district — the focus of previous rallies — saw sporadic confrontations on Tuesday afternoon. Police fired tear gas and used water cannon against groups of stone-throwing men, some of whom lit bonfires on deserted roads.

“Goons have infiltrated,” prominent Gen-Z protester Hanifa Adan posted on X.

AFP journalists reported seeing a number of arrests and injuries, although there are no official figures.

Several coffins, some covered with the national flag, were placed on roads by protesters, images on Kenyan television showed, before they were removed by officers.

Local politician John Kwenya told AFP that business owners shuttering their shops were “scared” of the “goons”.

“This is economic sabotage,” said Kwenya, a member of the Nairobi city county assembly.

Elsewhere in the country, local television broadcast images of larger marches in the coastal opposition stronghold of Mombasa, where a number of cars were torched, and Kenyan media shared video of at least one shop being vandalised.

Interior Minister Kithure Kindiki denounced what he described as an “orgy of violence”, warning that the government would take action against anyone engaging in “anarchic chaos and cruel plunder”. 

“This reign of terror against the people of Kenya and the impunity of dangerous criminal gangs must end at whatever cost,” he said.

On Tuesday last week, largely peaceful anti-tax rallies descended into deadly chaos when lawmakers passed the finance bill — a deeply unpopular move among Kenyans already suffering from a cost of living crisis.

After the announcement of the vote, crowds ransacked the partly ablaze parliament complex in central Nairobi as police fired live bullets at protesters.

Although Ruto scrapped the legislation and appealed for dialogue with young Kenyans, his actions appear not to have appeased his critics.

In a television interview on Sunday he defended his decision to call in the military to tackle unrest and insisted he did not have “blood on my hands”. 

In the Rift Valley town of Nakuru on Tuesday, protesters marched peacefully, with some carrying pictures of three people killed in last week’s demonstrations.

“We want justice for innocent Kenyans killed by police during the protests that were peaceful,” Mary Lynn Wangui told AFP.

“Ruto has not offered an apology,” said the 24-year-old, as she waved a placard declaring: “RutoMustGo”.

At a peaceful march in the lakeside city of Kisumu in western Kenya, demonstrator Allan Odhiambo, 26, told AFP he had lost hope in Ruto.

“We promised a peaceful protest and that is what we have done, but Ruto must go,” he said.

The state-funded KNCHR on Monday said that in the previous protests there had been 32 cases of “enforced or involuntary disappearances” and 627 arrests of protesters. 

Kenya’s cash-strapped government said previously that the tax increases were necessary to fill its coffers and service a huge public debt of some 10 trillion shillings ($78 billion), or about 70 percent of GDP.

In Sunday’s interview, Ruto warned that the government would have to borrow another $7.7 billion because of the decision to drop the finance bill.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Kenyan police shot dead one protester near parliament on June 25, a rights group said, with AFP journalists seeing three people lying motionless on the ground as crowds opposed to proposed tax hikes breached barricades to enter the parliamentary complex where a fire erupted.

The rallies, led by the youth, began last week, and caught the government off guard, with President William Ruto saying over the weekend he was ready to talk to the protesters.

But tensions escalated sharply on June 25, as crowds began to throw stones at police and push back against barricades, making their way towards the parliament complex, which was sealed off by police in full riot gear.

Police fired at crowds massing outside the parliament building, where lawmakers had been debating a contentious bill featuring tax hike proposals.

“Police have shot four protesters, as witnessed by KHRC, killing one,” the Kenya Human Rights Commission said in a statement on X.

Shortly before, Irungu Houghton, the executive director of Amnesty International Kenya, told AFP that “human rights observers are now reporting the increasing use of live bullets by the National Police Service in the capital of Nairobi”.

“Safe passage for medical officers to treat the many wounded is now urgent,” he said.

Cost-of-living crisis

Anger over a cost-of-living crisis spiralled into nationwide rallies last week, with demonstrators calling for the finance bill to be scrapped.

Despite a heavy police presence, thousands of protesters had earlier marched through Nairobi’s business district, pushing back against barricades as they headed towards parliament. Police in full riot gear were firing tear gas and rubber bullets into the crowd, according to AFP journalists.

As protesters gained ground in their push towards parliament, many were livestreaming the action earlier in the day as they sang, chanted and beat drums.

Crowds also marched in the port city of Mombasa, the opposition bastion of Kisumu, and Ruto’s stronghold of Eldoret, images on Kenyan TV channels showed.

Growing protests

The Independent Policing Oversight Authority watchdog and rights groups said that two people had died following June 20’s rallies in Nairobi.

Several organisations, including Amnesty International Kenya, said at least 200 people were wounded in last week’s protests in Nairobi.

Amnesty’s Kenya chapter posted on X on June 25 that “the pattern of policing protests is deteriorating fast”, urging the government to respect demonstrators’ right to assembly.

On June 24, ahead of the rallies, the rights body said Kenya was “at a crossroads”. “Despite mass arrests and injuries, the protests have continued to grow, emphasising the public’s widespread discontent,” it said, warning that “the escalation of force could lead to more fatalities and legal repercussions.”

Rights watchdogs have accused the authorities of abducting protesters in violation of the law. The Kenya Human Rights Commission said the abductions had mostly occurred at night and were “conducted by police officers in civilian clothes and unmarked cars”, calling for the “unconditional release of all abductees.”

Police have not responded to AFP requests for comment on the allegations. The protesters have also deployed unconventional tactics, including asking bars to stop playing music at midnight on the weekend as partygoers burst into chants of “Ruto must go” and “Reject finance bill.”

Their demonstrations have drawn support from some Anglican and Catholic church leaders.

Kenya’s Debt mountain

The cash-strapped government agreed last week to roll back several tax increases. However, it still intends to raise other taxes, saying they are necessary for filling the state coffers and cutting reliance on external borrowing.

Kenya has a huge debt mountain whose servicing costs have ballooned because of a fall in the value of the local currency over the last two years, making interest payments on foreign-currency loans more expensive.

The tax hikes will pile further pressure on Kenyans, with well-paid jobs remaining out of reach for many young people.

After the government agreed to scrap levies on bread purchases, car ownership and financial and mobile services, the treasury warned of a budget shortfall of 200 billion shillings ($1.56 billion).

The government now intends to target an increase in fuel prices and export taxes to fill the void left by the changes, a move critics say will make life more expensive in a country already saddled with high inflation.

Kenya has one of the most dynamic economies in East Africa but a third of its 52 million people live in poverty.

President Joe Biden shakes hands with Kenya’s President William Ruto at the end of a news conference in the East Room of the White House on May 23, 2024.
| Photo Credit: AP

U.S. President Joe Biden rolled out the red carpet on May 23 for his Kenyan counterpart William Ruto, unveiling plans during a lavish state visit to name Kenya a major non-NATO ally as Washington competes for influence on the continent against Moscow and Beijing.

Kenya will become the first sub-Saharan African nation to receive the designation, which is currently held by another 18 countries including Ukraine and boosts military and diplomatic links, although without a formal security pact.

Mr. Ruto’s visit comes as the United States and ally France are on the back foot in Africa, where massive Chinese investments and aggressive use by Russia of shadowy paramilitary groups are changing the geopolitical balance.

Biden, Ruto build on partnership

Greeting Mr. Ruto earlier in front of a colourful honour guard on the White House South Lawn,Mr. Biden emphasized that the two countries are “united by the same democratic values.”

“We are stronger and the world is safer when Kenya and the United States work together,” he said. He hailed the East African nation’s role in fighting the Islamic State extremist group and Al-Shabaab jihadists in neighboring Somalia.

Mr. Ruto, who underlined Kenya’s democratic record, said he would discuss climate change, debt distress and East African security with the American president. “I am confident, Mr. President, that the partnership of the United States and Kenya will give us the solutions that the world so seriously needs,” he said.

The leaders, in a joint statement, said that Mr. Biden “announced his intent to designate Kenya as a major non-NATO ally.” “This is a powerful symbol of the close relationship our two countries share,” the leaders said in the statement.

Haiti crisis, climate change, financial distress discussed

Talks in the Oval Office also focused on Kenya’s leadership of an upcoming international police mission to Haiti, where months of gang violence and political chaos have left the tiny Caribbean nation in humanitarian crisis.

“Democracy is obviously on the back foot globally and we see Kenya as an important, stable democracy in East Africa,” said a White House official, who spoke on condition of anonymity.

The two countries also announced partnership announcements in health and the battle against climate change, as well as private sector investment.

They issued a “joint vision statement” on reducing the mounting debts of developing countries and the handicap it represents for African countries trying to grow their economies.

Renewed focus on Africa

Mr. Biden held a major summit for African leaders in 2022, but the 81-year-old has not made good on promises to visit the continent as president.

The Democrat, who faces a rematch against Donald Trump in November’s presidential election, quipped on Wednesday that he does plan to visit Africa, next February when starting a new term.

Africa has often been on the back burner for US diplomats but the continent now presents a growing headache in Washington. Russia has established new footholds, most recently in Niger, where the United States has agreed to withdraw its 1,000 troops, while Russian troops come in.

The United States also faces competition from China, which has pumped billions in infrastructure money into Africa for the past two decades.