How We Got Here: The Hike in Fuel Prices and Why That Has Many Kenyans on Edge.

Many Kenyans continue to feel the pinch even as the cost of living increases due to a rise in fuel prices.

The previous week has been a tumultuous one, to say the least. A sudden increase in fuel prices meant that many Kenyans were left to grapple with the fact that they had to dig deeper into their pockets. Any hike in fuel prices affects the cost of pretty much everything else. The cost of fuel has now more than doubled from the beginning of last year, which just goes to show how much tougher life is seemingly getting. How did we get here? Why is our economy seemingly falling apart so quickly?

During the campaign trail for the 2022 General Elections, the talk of lowering taxes and improving the standard of living for Kenyans was at the core of the Presidential candidate, William Ruto. It was, in fact at the heart of his Bottom-Up economic approach, which promised to empower the so-called ‘hustler’. The term hustler was adopted as a representation of the typical hardworking Kenyan at the bottom of the economic pyramid.

To say that this wave of popularity took the masses by storm would be a massive understatement. Despite stiff opposition from the Azimio coalition, Ruto was elected to power by many who identified with his ‘hustler’ narrative as they hoped that he would make their lives much easier.

The situation could not have been farther from expectations one year later. Ruto’s Kenya Kwanza government has been hell-bent on increasing its grip on the typical Kenyan’s pay slip. Taxation has been increased substantially, with the taxman seemingly inventing new ways to raise taxes out of thin air. The recent fuel hike only adds to the already difficult situation. Despite a promise and a commitment to improve the standard of living by lowering taxes upon its election, the Kenya Kwanza government has gone far and beyond to widen its tax bracket.

Kenyans are now contributing up to 37% in taxes alone per liter of fuel which goes to show the government’s insatiable appetite in collecting even more taxes. Many of the very ‘hustlers’ who voted for the current government in great anticipation for the future have been left feeling shortchanged and disappointed by the government’s seeming lack of commitment to fulfilling its promise.

Where did it all go wrong? What is it with the sudden increase in the cost of living? Why does the situation seem to be getting worse with each passing day? The country has seemingly been on a downward death spiral ever since the days of COVID-19 especially given the lockdowns and economic go-slow that came with the pandemic. Despite signs of a robust recovery in 2021, the economic situation quickly worsened in the following year and it has seemingly gotten worse this year.

All signs point to even tougher times ahead and many Kenyans are finding it harder to survive each day, even as the load on their shoulder seems to be getting heavier. Even the light at the end of the tunnel, which would have given us a slight glimmer of hope, has gone out as no one can pay for its electricity bill. In other words, it is all doom and gloom from hereon.

Kenya’s economic troubles have been years in the making. In an article published back in 2018, the well-renowned Kenyan economist David Ndii clearly illustrates how a flawed monetary policy, perpetuated by the Central Bank of Kenya doomed the Kenyan currency. The Bank intentionally manipulated the value of the currency causing it to become bloated and inflated. Consequently, the IMF was forced to declassify the currency from being a floating exchange. In the words of the famous Ghanaian economist Dr. Mhamudu Bawumia,

‘The lesson from history is that you cannot manage the economy with propaganda. In fact, you can engage in all the propaganda you want but if the macroeconomic fundamentals are weak, the exchange rate will expose you.’

A weakening global economy has exposed the true nature of the Kenyan economy and for the first time in years, probably, Kenyans have been exposed to the true nature of their currency and economy. Subsidies to cushion them from the economic hardships have become unsustainable. Now is the time to face the bull by its horns.

Despite these mistakes being a product of previous regimes, the Kenya Kwanza government is not absolved from its responsibility for worsening the situation. In addition to the adoption of tax measures that were uncalled for given the current economic situation, the current government has continued borrowing more. The continued borrowing flies in the face of advice from many economists who warn of economic insolvency once the debts get out of hand and repayment becomes an uphill task.

The tendency towards borrowing has been a carry-over from previous regimes and as the debt ceiling is seemingly raised higher, debt distress becomes an increasingly plausible reality.

While much of the borrowing from the previous regime went into financing ‘white elephant’ infrastructural projects, a lot of the borrowed money is currently being channeled towards recurrent expenditure. The government has been increasingly obstinate towards lowering its expenditure. To make matters worse, it has been steadily increasing its wage bill, with much of the civil service looking to have their salaries raised. All in all, the obsession by this government to spend more than it has brought in is part of the reason why the economy is in the current limp mode.

Talking about the level of corruption that eats away at the rotting avenues of government has become a cliché by now. Corruption and gross mismanagement have become a norm in this country and it is a well-established fact that to get anything done one needs to grease some palms in some way or another. It is painful to watch as corrupt government officials and politicians walk around scot-free, ‘doing the Lord’s work’ even as the normal Kenyan continues to wallow and suffer in poverty.

Many Kenyans are now more predisposed to poverty than ever before. The situation is incredibly frustrating, especially given the effort put in in years gone by to rescue many from poverty. The country has become a poster child for the continent and the developing world at large, given its rapidly expanding economy. Mistakes were and continue to be made even in that time of unprecedented growth, and we might just be living out the consequences.

Therefore, it should come as no surprise that many Kenyans are looking to move abroad in hopes of creating better lives for themselves away from this exploitative and oppressive economic setting. The struggle is real. Many are having a much tougher time putting a meal on the table.

The very hustlers who were promised the world, heaven, and the skies have been left wondering whether they voted for the same people who were peddling all these promises to them. At the end of the day, everyone suffers regardless of their political choices or affiliations. Everyone feels the pinch when the price of fuel and the cost of living goes up. Instead of playing politics, the time has come for everyone to put their heads together and find a way of cleaning up this mess.