Kenya’s Mass Protests Reveal Africa’s Anger Toward the IMF

William Ruto finds himself in the hot seat of a developing nation sandwiched between multilateral lenders and a fuming populace.

Kenya is in the throes of violent anti-tax riots that have convulsed the region’s leading economy. Protesters, in no uncertain terms, have laid the blame at the door of both their government and international bodies.

“IMF, back off from Kenya!” read one defiant mural. Amid live bullets and tear gas in Nairobi, 25-year-old protester Job Muremi claimed, “The IMF has brewed this chaos upon our land.”

The recent upheaval, which forced President William Ruto to retract a finance bill that aimed to rake in over $2 billion in taxes, has highlighted Washington-based multilateral lenders’ sway over Kenyan policy.

With the IMF pinpointed as the architect of Ruto’s fiscal policies and austerity measures, countless jobless youths flooded the streets waving placards with slogans like “We aren’t IMF puppets” and “Kenya is not IMF’s experiment.” Protests blazed on despite the bill’s withdrawal, calling for Ruto’s resignation and branding him a “puppet” of the funding organization.

Kenya’s scenario isn’t unique on the continent; citizens across Africa have often resisted austerity measures dictated by lenders insistent on fiscal discipline in return for affordable loans.

In Nigeria, President Bola Tinubu introduced severe economic measures including slashing petrol subsidies, cutting electricity support, and devaluing currency. This prompted labor unions to strike. The World Bank gave Nigeria a $2.25 billion loan package and praised its “crucial reforms.”

Ex-Nigerian President Olusegun Obasanjo told the Financial Times that IMF and World Bank prescriptions that might help developed nations aren’t fit for emerging economies. He argued African states should “design their own fates.”

“If the World Bank and IMF draft our plans, we’ll inevitably fail,” Obasanjo opined. He noted that while lender staff might be academically brilliant, they lack the practical know-how to offer suitable advice for millions in developing nations.

The IMF acknowledged that meeting developmental needs in sub-Saharan Africa calls for improved public spending prioritization, quality, and efficiency. The fund maintains that it considers country specifics when advising on policy reforms. Still, it emphasized the necessity of building public trust and support for policies to ensure domestic ownership.

Proponents of these lenders argue the IMF provides loans at much lower interest rates than commercial options, with the aim of placing countries on a sustainable path. They highlight instances of debt relief, such as that granted to Somalia in December. Similarly, the World Bank promotes sustainable reforms through development funding.

Charlie Robertson from macroeconomic advisory firm FIM Partners dubbed the IMF a “handy scapegoat.” He noted the alternative for most nations is borrowing at low percentages from the IMF or facing exorbitant rates from commercial lenders.

Robertson portrayed the IMF as a “last-resort lender,” asserting that many of the financial decisions prescribed by the fund are ones governments would need to make regardless.

In Africa, there’s a widespread belief that stringent economic measures do little to alleviate inequality or improve lives. Leaders like Ruto are in a bind—forced to raise taxes and cut spending despite the potential for political unrest. Similar dynamics have unfolded in Latin America, notably in Ecuador, where IMF loan stipulations sparked street backlash in 2019.

“African nations are closely observing Kenya,” said Nairobi-based economist Vincent Kimosop. “Those in power shouldn’t feel too comfortable.”

Other African countries will soon face their own difficult choices. Oil-rich Angola seeks to cut fuel subsidies, while Ethiopia, tentatively recovering from a civil war, is negotiating an IMF loan and reform package likely involving a major currency devaluation amid rampant inflation and a foreign currency shortage.

This familiar dilemma for emerging market leaders grows sharper with high government debt. In the last year, a record 54 developing nations—equivalent to 38% of the total—devoted 10% or more of government revenue to interest payments, nearly half of them in Africa, according to the UN trade and development agency.

Kenya’s upheaval has shown the dangers of aligning too closely with Washington’s economic prescriptions, while ignoring local demands, a senior foreign diplomat in Nairobi remarked.

Protesters in Kenya have shown they’re willing to risk their lives against reforms they see as the handiwork of an extravagant government.

The spark for their fury was a tax bill targeting essentials like bread and sanitary pads. Demonstrators recently stormed the parliament, leading to a brutal police response that left at least 39 dead.

Ruto’s predecessor, Uhuru Kenyatta, took out hefty loans from Beijing and international markets during low-interest periods to fund infrastructure projects. Many of these ventures, however, did not generate sufficient revenue to repay the debts.

Ruto, famously self-styled as a “hustler” with a rags-to-riches background, assumed office in 2022 pledging to ease Kenyans’ financial burdens. Yet, his push to levy new taxes has earned him the moniker “Zakayo,” the Swahili name for the biblical tax collector Zacchaeus.

The president, who is also among Kenya’s wealthiest business moguls, is grappling to meet the conditions of a $3.6 billion IMF bailout initiated four years ago, which requires boosting revenues and slashing spending. Interest on Kenya’s debt has consumed almost 38% of yearly revenues, the World Bank reported.

“Frontline protesters… believe the IMF starts fires, not extinguishes them. We’ve had tough times with the IMF,” said economist Kimosop, referencing the 1980s when the IMF stipulated free-market reforms as a condition for emergency lending.

The structural adjustment programs, or “SAPs,” mandated deep cuts in public services, along with privatisation and liberalisation of trade and finance.

Nigeria also implemented a structural adjustment program in the 1980s, leading to forex reforms and a shelved attempt to diversify away from oil. Many still blame the IMF-linked program for dismantling minimal social safety nets. Nigerian musician Fela Kuti famously sung that SAP meant “Suck African People—suck dem dry.”

North African nations too share a lengthy history with the IMF. In March, Egypt devalued its currency to secure $8 billion in IMF loans, resulting in a sharp depreciation against the dollar. Despite widespread grumbling over soaring prices and high poverty, the streets have stayed quiet due to a ban on unauthorized protests.

However, not everyone on the continent despises the IMF. After Ghana initially resisted an IMF bailout for its failing economy in 2022, civil society groups clamored for it. Ghana eventually took the IMF route, with the lender assuring Ghanaians that the program would protect the vulnerable.

Kenya, with a clean record of never defaulting, managed to sell new debt in February—albeit at the steep cost of 10% interest—calming fears it might follow defaults by Ethiopia, Ghana, and Zambia. Before the protests, the IMF had lauded Kenya for needing to undertake “a significant and immediate fiscal adjustment” and applauded the contentious tax hike.

After the upheaval, a senior official at a multilateral lender suggested the government might now signal to the IMF that the planned adjustments are politically unfeasible.

Ruto’s reversal has cast doubt on his ability to meet IMF expectations. Credit rating firm S&P foresees Kenya failing to achieve its fiscal goals, as “the government will now likely be more cautious about taxing the economy.”

Responding to the turmoil, IMF spokesperson Julie Kozack stated the fund’s mission in Kenya was “to help… enhance economic prospects and the wellbeing of its citizens.”

Vincent Kwarula, who started a petition to scrap Kenya’s debt to the IMF, rejected this notion. He asserted the IMF “has played a pivotal role in perpetuating this crisis. We demand the IMF to keep its hands off Kenya and Africa as a whole.”

Additional contributions by David Pilling in London and Heba Saleh in Cairo