Bringing Kenya’s Economy Back into Balance

By Peter MACHARIA

We can see an immediate growth prospects after President William Ruto named the second batch of his cabinet.

On July 11, Ruto dissolved his Cabinet, sending home all Cabinet Secretaries and Attorney General. Last week the President named the first batch of 10 cabinet secretaries leaving a vacancy of 11 others.

During his address to the nation on Wednesday, the President nominated 10 CSs to the second batch of the cabinet nominees.

The President nominated Kipchumba Murkomen for the Ministry of Youths and Sports, Rebecca Miano for the Ministry of Tourism, Justin Muturi for the Ministry of Public Service, Salim Mvurya to head the Ministry of Trade and Alfred Mutua for the Ministry of Labour.

He further nominated members allied with Opposition leader Raila Odinga to the cabinet, naming Hassan Joho for the Ministry of Mining, Blue Economy, Wycliffe Oparanya for Cooperatives and MSME Development, John Mbadi for the Ministry of National Treasury and Opiyo Wandayi has been nominated to head the Ministry of Energy and Petroleum.

That could now offset “excess caution and excess gloom” about the economic outlook, according to economic observers.

Indeed following the new developments are optimistic Ruto’s move to form a new unity government can now deliver stable economic policies to revive growth, but are cautious that the new cabinet can reconcile stark ideological differences.

As an economsit, this offers clarity, but we have to wait and see how the new cabinet will attempt to undo some of the economic challenges faced by the country today.

People’s expectations are important in shaping their decisions, from whether to invest in expanding a business to borrowing or spending on new ventures or acquiring an asset.

Whichever theory applies, what we think will happen to the economy in the future determines what we decide today — and thus shapes the future.

What investors and majority of Kenyans want is more focus on promoting local production and predictable tax policies as well as leveraging in as much private investment as possible to create an attractive investment for more capital and to support the ambitions of this Government.

Wider economic developments will however also be a factor, according to Macharia who believes the president should now unite the country and focus on rapid, inclusive and sustainable economic growth, the promotion of fixed capital investment and job creation for the agitating youth.

Indeed, high interest rates have remained elevated as the Central Bank of Kenya (CBK) continues to battle inflation following a tough 2023 and the lingering consequence of the Covid-19 slowdown, and that the new move will likely have different consequences for the investing environment.

The weekly protests have however, was as a result of the introduction of a new finance bill that would levy punishing taxes on everyday essentials, including sugar, bread, and cooking oil—a policy that would hit poor Kenyans particularly hard.

The same bill – which has since been dropped following public uproar, had also set aside vast sums for the renovation of the president’s residence and other extravagant expenditures.

It was a move that enraged a new generation of Kenyans – or Generation Z and a host of millennials, many of whom voted for President Ruto just two years ago when he said he would create a million new jobs but now feel that the promises made to them are being betrayed and their futures are being stolen.

The extra taxes were supposed to raise about Sh350bn Kenyan shillings, while about 600bn was going to be borrowed.

According to the president, the proposed tax measures were part of efforts to cut the debt burden of over $80bn (Sh10.3trillion). About 60% of Kenya’s collected revenues goes to servicing debt.

The author is the CEO of Jijenge Credit Ltd