Kenya Seeks Public Input for Economic Reform Legislation Post-Protests

A sweeping view captures Nairobi’s bustling central business district on February 18, 2022. REUTERS/Thomas Mukoya Purchase Licensing Rights

In a bid to rejuvenate its economy, Kenya’s finance ministry is calling upon the citizens for their insights on new laws aimed at increasing revenue and addressing various challenges. Finance Minister John Mbadi made this announcement on Monday, following a wave of protests that compelled the government to retract its financing law.

Back in June, President William Ruto scrapped proposed tax increases totaling over 346 billion shillings (approximately $2.7 billion), which were triggered by demonstrations that resulted in the tragic loss of more than 50 lives.

As a consequence, the already burdened government now faces an even larger budget deficit this fiscal year, compounded by a backlog of pending bills and a delay in funding from the International Monetary Fund (IMF). “We are barely managing. This is not where we wanted to be, but we are here,” Mbadi expressed during a budget preparation meeting. He was recently appointed from the opposition in a strategic move by Ruto to stabilize his leadership.

Initially, Mbadi hinted at a revival of some tax increases from the scrapped finance bill, only to backtrack following strong public dissent and the looming threat of further protests.

“Tomorrow, I will issue a circular inviting public participation to gather proposals for legislative reforms aimed at enhancing our economic climate,” he confirmed. Kenyans will have until September 20 to voice their opinions.

Mbadi emphasized that the nation must continue to honor its debt obligations, which exceed the levels recommended by both the World Bank and the IMF. This debt accumulation stems from years of investment in infrastructure projects.

“We have no alternative. There will be no debt restructuring in this country. We will not entertain it. We will responsibly manage our debts, making payments to stay afloat,” he stated firmly.

Looking ahead, once economic conditions improve, the government plans to contemplate tax reductions, including a decrease in the value-added tax on goods and services from 16% to 14%, and a reduction of corporate income tax by 500 basis points to 25%.

($1 = 128.2500 Kenyan shillings)

Reporting by Duncan Miriri; editing by George Obulutsa and Andrew Cawthorne