Large-scale protests erupted across Kenya following the parliament’s approval of a 2024 finance bill that raises taxes on a range of everyday essentials, such as cooking oil, diapers, and bread. This comes at a time when the population is already grappling with inflation, high unemployment rates, and a widening and more visible gap in living conditions between the country’s elites and its masses. Protests culminated in the Kenyan parliament, where police fired at protesters, reportedly killing at least 13 people and injuring hundreds more.
Following the deaths and the backlash that accompanied it, Kenya’s President William Ruto conceded and stated he would not sign the finance bill, and it would subsequently be withdrawn. Ruto was elected with the promise to enhance the lives of Kenya’s youth and lower classes, positioning himself as a departure from the old, corrupt, politically intertwined elite. However, despite the nation’s abundant resources and the economic boom of the early 2000s, he has been unable to fulfill these promises. This failure has left a significant portion of the population dissatisfied with him and his government, resulting in recent widespread protests.
The government contends that it had no choice due to the country’s immense debt burden—domestic and foreign debt reached an astounding $80 billion last year, nearly three-quarters of its GDP. More than half of the government’s revenue went toward debt servicing last year. This crisis highlights the flaws in the development model that Kenya and several other African countries follow. As one of Africa’s fastest-growing nations, Kenya has borrowed extensively from multinational lenders like the World Bank and the IMF, and bilateral partners such as China to fund its infrastructure projects.
The origins of the recent protests have been developing for years, with Kenyans perceiving an economic and financial system that works against them. The tensions began to peak during last summer’s anti-tax protests, but this year, the movement has taken on a new form. It appears to be primarily driven by young people who are leaderless and coordinating online. According to Nic Cheeseman, professor of democracy and international development at the University of Birmingham, this is not surprising.
But Kenya’s economic woes didn’t start recently; the nation’s immense debt stems from an economic boom in the early 2000s when the government borrowed money from a variety of international creditors to fund public infrastructure projects, supporting agriculture and small and medium businesses and external debt servicing but failed to invest those loans in ways that could grow the economy. In addition, a series of costly natural disasters (including floods and Covid-19), an effective taxation strategy, and the long-term pattern of politicians overspending to make good on campaign promises, and Kenya was poised for crisis.
Amid widespread distrust of his administration, Ruto must now find a way to effectively manage Kenya’s debt load and avoid default without further harming the economy or stoking people’s very real anger. It’s unlikely that he’ll be able to accomplish all of these tasks, but failing to act could push Kenya further into economic disaster.
Kenya is currently facing limitations in managing its debt burden. While defaulting on payments might provide short-term relief to the population, it would significantly harm the country’s credit rating and future borrowing capability. Furthermore, defaulting could lead to difficulties accessing foreign currency and paying for imports, potentially resulting in inflation and civil unrest, as seen in Sri Lanka in 2022. It is crucial for Kenya to consider the long-term consequences and explore alternative solutions to address its debt burden.
In the long run, depending solely on financial injections provides only temporary relief from deep-seated problems like corruption, inefficiency, and poor governance. Efforts aimed at tackling these issues are likely to provoke resistance from the extremely wealthy, who benefit from corrupt relationships with government officials. Beyond managing debt obligations, the core challenge remains the pervasive lack of confidence among Kenyans in their government’s dedication to their welfare. This pervasive distrust has sparked economic demonstrations but is rooted in Kenya’s political environment and the perceived ineffectiveness of global financial bodies in aiding developing countries.
Kenya’s difficulties exemplify the issues confronting numerous developing countries burdened by debt. Binaifer Nowrojee, the president of the Open Society Foundations, highlighted in Foreign Policy that “over 3 billion people worldwide reside in nations where debt servicing exceeds public spending on education or health.”
In Africa, Zambia and Ghana defaulted on their payments and subsequently negotiated agreements with their creditors to restructure their debt. Mr. Ruto, who assumed office in 2022, had pledged to tackle the debt issue. However, his approach has been conventional and lacking innovation, allowing the unpopular IMF to impose one-sided policy measures. With the withdrawal of the bill, he must now proceed cautiously. He has not yet detailed his next steps, aside from mentioning the implementation of austerity measures.