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What is happening in Kenya?

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As of the beginning of this week, July 1, 2024, a trade agreement between Kenya and the European Union, signed on December 18, 2023, came into effect. This economic cooperation was part of a context where Kenya's political stability and economic growth had excited many analysts, to the extent that some even suggested that Kenya could become the African Singapore.

However, since June 18, 2024, the country has been engulfed in intense protests that have resulted in the deaths of 39 people according to the Kenyan government and nearly double that number according to the Kenyan National Commission on Human Rights (KNCHR). While everything seemed to predict a bright future for the country, how can we explain this wave of protest sweeping through the streets of its capital and also those of Mombasa, Kisumu, and Nakuru?

The Finance Bill that crystallizes discontent in a context of inflation and over-indebtedness

On May 13, 2024, the Finance Bill for the fiscal year 2024-2025 was made public. This bill notably proposed an increase in the VAT on bread to 16%, an annual tax of 2.5% on private vehicles, the introduction of an eco-tax on products considered harmful to the environment, a 25% tax on cooking oil, an increase in the tax on financial transactions, a tax on the construction and equipment of specialized hospitals, a tax on diapers, and a tax on digital services and devices set at an effective rate of 6%. After a few generally unsuccessful attempts at negotiation, on June 18, 2024, the bill was presented for its second reading in Parliament. The same day, the first protests erupted.

Although triggered by this bill, the discontent of a section of the Kenyan population has roots in a broader context. Indeed, for several years, there has been criticism among the population against the government's perceived insensitivity to an economically difficult situation experienced by part of the population. These difficulties are linked to an inflation rate around 5% annually. This inflation can be attributed to a wide range of factors, some international like the rise in commodity prices following Russia's invasion of Ukraine or the economic fallout from the COVID-19 pandemic. Others are more local, such as rapid urban population growth fueling city inflation.

In addition to inflation, a major source of tension, there is also disappointment with President William Ruto. Elected narrowly on September 5, 2022, with 50.5% of the vote against 48.8% for his main opponent Raila Odinga, Ruto had campaigned as an outsider promising a bottom-up economic approach that would benefit the poor.

Elected on a promise to tackle the cost of living crisis, especially for struggling youth, he quickly faced reality. He found that state expenditures were in a deteriorated state, with national debt at $80 billion, about 75% of the country's GDP. Additionally, 65% of annual revenues went to servicing this debt. Ruto quickly shifted to fiscal austerity, ending subsidies implemented by his predecessor, Uhuru Kenyatta, including on fuel. He also introduced a 5% increase in income tax for high earners and a 3% tax on housing.

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Timeline of Anger

The parliamentary majority appeared to guarantee that the government could pass the bill. However, an unexpected source of dissent quickly emerged. Historically, opposition leaders played the main role in rallying supporters to the government's policy. This time, using social media platforms as a springboard and without guidance from political leaders, young Kenyans mobilized to express their discontent. The hashtag #REJECTFINANCEBILL2024 gained importance the weekend of June 15, with many calling for protests to make their point of view heard. On TikTok, dozens of videos circulated criticizing the government's policy.

On June 18, before the second reading of the finance bill in parliament, thousands of people marched in the streets. The initially peaceful nature of the protests helped gain public support. The protesters came from a wide range of ethnic groups and regions, and their demands sparked intense debate in the national media and on social media about the state of the economy.

Between June 18 and June 24, the protests intensified. Despite the protest movement, the National Assembly voted on June 20 to advance the bill to the next stage. The movement that began in Nairobi gradually spread to major cities, traditional bastions of the opposition, but also to smaller towns that had rarely seen protests. The demands, initially focused on the bill, diversified. During a live discussion on June 22 on the digital platform X, which attracted tens of thousands of participants, many called for fundamental changes in governance to address issues such as youth unemployment.

The scale of the protests and the level of repression that followed reached their peak on June 25. That day, lawmakers passed the controversial bill, although it lacked some of the most contentious measures. While the protests began peacefully in the early hours, they quickly turned violent, and protesters stormed the Parliament building in Nairobi. Parts of the building were set on fire, and several people were killed in Nairobi and other cities.

On June 26, under street pressure and also from international organizations and Western countries, President William Ruto announced that he would not sign the finance bill in response to the violent protests and calls for peace. He proposed a national dialogue to address the concerns raised by the protesters.

Despite the withdrawal of the bill, since June 26 and the beginning of July, protests have continued, albeit more sporadically and with a lower level of violence than in previous days. The situation in the country remains unstable, and Kenya is unfortunately not immune to a resurgence of tension.

What's next?

The plan aimed to reduce the budget deficit from 5.7% of GDP to 3.3% of GDP for the next fiscal year. This measure was intended to comply with an IMF program urging Kenya to increase its resources and reduce its expenditures to restore fiscal balance. Ruto's decision, which represents a victory for the protesters, makes the country's future more uncertain than ever, both economically and politically. About $35 million of this debt is held by foreign creditors, mainly China and powerful international groups like the World Bank and the International Monetary Fund (IMF). If Kenya fails to pay this amount, the possibility of borrowing in the future will become more difficult in the short term; in the long term, this could mean more unemployment, more poverty, and a generally worse situation for Kenyans.

This crisis also appears symptomatic of what could happen in other countries on the continent. Indeed, while an annual inflation rate of 5% is one of the drivers of this crisis, the fact that the continental average was 15.7% at the end of 2023 suggests similar destabilizations could occur in other African countries. Additionally, up to 22 African countries are listed as being in a situation of over-indebtedness. To avoid greater instability, Western partners and international financial institutions might need to show more leniency to meet this challenge across the continent, possibly exploring measures advocated by several NGOs, such as through debt restructuring with lower payments and longer repayment periods and reevaluating the value of loans in some cases.

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EU Reporter publishes articles from a variety of outside sources which express a wide range of viewpoints. The positions taken in these articles are not necessarily those of EU Reporter.

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