On Tuesday, angry protestors stormed the Kenyan Parliament in what seemed to be a desperate reaction to the Finance Bill 2024 (annual budget) which was tabled and passed within 2 hours on the same day. The Bill sought to impose taxes to raise an additional US $2.3 billion to deal with the ballooning national debt.
Local media reported portions of the Parliament set on fire by the protestors. By the evening, six protestors had succumbed to bullets. A total of 23 people have died at the hands of law enforcement till Thursday. Allegations of police violence have also surfaced.
In “45 minutes of terror: Mayhem and bloodshed as protesters occupy Parliament – The Standard”; Josphat Thiong’o aptly described the scary moments for the parliamentarians who were led to safety via a tunnel after protestors gained access to parts of the Parliament building. Viral videos showed unarmed protestors chanting slogans, burning objects inside parliament, and damaging monuments. In the afternoon of Wednesday, President Ruto conceded a major demand of the protestors by withdrawing the contentious bill. But as the sun set on Thursday, “Ruto must go” was still audible on the streets of State House in Nairobi albeit with a thinner crowd.
Kenyan Economic challenges: While Covid was a severe challenge for national economies across the globe, the Kenyan economy had incurred high national debts in the decade preceding the onset of the pandemic. The data from International Monetary Forum shows doubling of the general government gross debt as a percentage of GDP across the 2010-20 timeline. Chatham House reported that rise in debt was led by incessant borrowing from China by the previous government (2013-22) under Uhuru Kenyatta. Current President William Ruto served as the deputy president during that period.
In 2023, the Kenyan government had cited the revenue shortfalls and rising debt costs as a major challenge to its economy. This was perpetuated by the Covid pandemic which dealt a big blow to national debt by diminishing revenue collections significantly in the 2020-22 period. To deal with this, Kenyan policymakers sought increasing loans from multilateral institutions such as the IMF. In the period spanning 2021-23, IMF loans to the country rose significantly in addition to lending from other international and bilateral partners. The IMF has yet lended $3.6 billion to Kenya. In February this year, the East African had reported that the issue of a fresh Eurobond helped Kenya get over fears of default.
Debt-trap concerns were also reported in the global media earlier this year with the incumbent President Ruto seeking to reduce Kenya’s dependency on China. Kenya’s bilateral debt with China was almost 64 percent in 2023 or $6.3 billion. Kenya is part of China’s Belt and Road Initiative (BRI) which funds infrastructure projects by Chinese entities, but the national debt doubled to $8 billion in the 2018-2023 period. It included the important Mombasa-Nairobi railway project. A 560 kilometer long railway project, built at a staggering cost of $4.7 billion, but marred by cost-overruns, corruption allegations, etc. The New York Times in an article in August, 2022, had reported that the Kenyan government had imposed a “raft of taxes and austerity measures that have angered the public.” The article also cited that transport costs of the China-funded railway was double of such routes via roads making it a loss-making project.
The latest financial bill was made in coordination with the IMF which agreed to the tax hikes in a bid to meet the rising debt payments. Apart from a 16 percent VAT on financial services and foreign exchange activities, the bill imposed a spate of taxes including items of common interest such as mobiles, computers, plastics, sanitary items, etc.
According to the International Labour Organization (ILO), Kenya saw the unemployment rate double to a little over 5% in 2015 which continues to stay the same today. Similarly, the inflation rate of the country has continued to remain above 5 percent in the past five years. But the growth rate has not been phenomenal, mostly trailing the inflation figure. Structural issues in the economy have accentuated the massive anguish of the public too.
The Foreign Policy Magazine speculated that the high debt costs for the public is a significant reason for distress. It reported that entities lending microfinance to the general public via the simplified digital ecosystem offer ease of availability but exorbitant interest rates, while government finance remains quite limited. This is particularly of interest to the youth who rely on short-term financing for their career goals. Lack of employment and growing opportunities for the youth is a major factor in the current protests.
Going forward, the Kenyan government will not have much policy space to give concessions on taxes. Political instability is also a possibility as resentment against Ruto has been rising. A section of the public has been demanding his resignation even after he announced on Wednesday that he will engage with youth to address their concerns in the coming months. Policy continuity will be watched by global lenders who also have a role to play in the ongoing crisis. The Kenyan government will need to engage with multiple partners to soften the impact of the debt repayments and reduce borrowing costs going forward.
What caused the massive build-up of frustration among the young in Kenya will be a matter of interest for all policy makers. Targeting legislative institutions has become a prominent tactic in the recent past across several distressed democracies including developed countries, such as the United States of America, France, etc. Given that the recent Kenyan protest is being dubbed as a wholly Gen Z protest by some analysts, it presents an opportunity to study the role of digital medium and mass psychology in shaping mass protests. Governments will need to adopt public engagement better, which involves the digitally hyperactive Gen Z.
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