In response to Kenya’s debt owed to the IMF and other international lenders, President William Ruto has implemented a number of austerity policies, defined as deep cuts to government spending combined with regressive taxes which disproportionately affect the working class and unemployed. Over the past year, subsidies on key products such as maize flour have been removed without warning, while VAT on fuel has been doubled – up to 16%. In October last year, all ministries and departments were subject to a blanket 10% cut to operational budgets. This comes in the middle of a cost of living crisis that had been set off by COVID-19-currently “73 percent of Kenyans are either in severe financial distress or are failing to make ends meet.”
The introduction of the recent finance bill has poured fuel on the embers still smouldering within Kenya’s youth, workers and civil society from the past year’s austerity measures. This bill put forward absolutely brutal measures, such as a 16% tax on bread and another year of budget cuts to key sectors such as healthcare and education. Mass protests have erupted this past week, and after over 300 arrests and at least one death at the hands of police, the government has withdrawn some of the most egregious measures. But Kenyans are still in the streets to show that they are not prepared to be the scapegoat for the mismanagement of Kenya’s public finances by its elite, who have continued with wasteful expenditures such as the renovation of state lodges and the creation of unnecessary posts – including offices for the spouses of cabinet ministers.
There are some parallels with our own situation. While South Africa has not experienced anything like Ruto’s full-blown austerity, even our ‘diet austerity’ has plunged thousands into unemployment, precipitated a crisis in public health, and prevented any hope of a ‘post-Covid recovery’ for the working class and the unemployed. Beyond the direct impacts, austerity can also be self-defeating. A reckless slash-and-burn approach to basic services, state capacity, and social support as adopted in Kenya might close the deficit in the short term, but over the long term, it cripples economic growth, consumption and investment. The economy cannot grow if people are too precarious to invest, save, or spend on anything aside from the most basic necessities. Kenya’s current expenditure on debt service costs is clearly unsustainable, but so is an approach that sacrifices tomorrow’s growth in order to pay for today’s interest.
The roots of Kenya’s crisis are complicated, but a combination of post-COVID debt, falling growth rates, and a cost of living crisis are a very recognisable syndrome in the Global South. While the cure might be different for each country, it is nonetheless clear that this is a syndrome for which the neoliberal treatment provides little relief. Reversing this trajectory requires both the political strength to contest the imposition of this developmental dead-end by institutions like the IMF or our compliant national elites; as well as the political imagination necessary to build an alternative.
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For media comments, contact:
Dominic Brown – 081 309 4973 or dominic@aidc.org.za
Aliya Chikte – 082 695 5659 or aliya@aidc.org.za
Jaco Oelofsen – 084 376 9019 or jaco@aidc.org.za
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