Seek innovative ways to stimulate economy
The latest International Monetary Fund (IMF) forecast shows that economic activities in sub-Saharan Africa will slow down significantly in 2022 and remain relatively modest in 2023 signalling tough times ahead for Kenyans.
Coming on the back of an economy already pressed hard by the Covid-19 shocks, drought, an electioneering period that saw investors check their appetite for new or increased investment in Kenya, and the high cost of living, the ride ahead will not be an easy one.
Unfortunately, the high cost of fuel and turmoil in global markets due to a recession and the ongoing war in Ukraine are exerting more pressure on Kenya, which is a net importer of food and fuel. With debt estimated at Sh8.4 trillion and collections that are not enough to meet the Sh3.3 trillion national Budget, Kenya has no choice but to austerity measures to survive these tough times. That will have a ripple effect on the economic wellbeing of its citizens.
The current situation has seen the government cut its Budget by over Sh300 billion as part of austerity measures to ensure that it does not go for more loans to finance its agenda.
Further, there are plans to grow the revenue collection to Sh3 trillion this year and hit Sh6 trillion in the next five years, amid tax reform measures, again implying that more Kenyans will find themselves in the tax bracket while those already there could be asked to pay more.
These are all inevitable as the new government repackages itself to deliver promises it made ahead of the election. However, more must be done to expand the economy so that it can create increased opportunities to employ the millions of unemployed youths and to grow the wealth of those already actively engaged in economic activities.
The recent call by the government to use local labour to build houses and fill the huge deficit in the housing sector is welcome as it will create more jobs. However, the government should listen to the private sector and put in place measures to attract more foreign direct investors.
Meanwhile, the IMF — which has been pushing Kenya to do away with subsidies — now wants policy measures to include protecting the most vulnerable in the society through targeted cash transfers, or an expansion of social safety nets so that we do not lose them along the way. This is the right way to go if Kenya is to reduce poverty levels.
