The International Monetary Fund (IMF) should work with the Kenyan government to ensure that the global organisation’s support for the country is aligned with human rights and that corruption does not consume funds meant to improve the lives of citizens.

Advocacy group Human Rights Watch reports that Kenyans have raised concerns about the country’s heavy borrowing, which has done little to improve their lives. At the same time, Kenyans claim that they are paying more taxes so that the government can repay the debt.  

“The widespread outrage sparked by proposed taxes on goods like sanitary pads and cooking oil in a country where corporate tax evasion is endemic should be a wake-up call to the Kenyan government and the IMF that they cannot sacrifice rights in the name of economic recovery,” said Sarah Saadoun, Senior Researcher on Poverty and Inequality at Human Rights Watch.

The New York City-based international non-governmental organisation (NGO) says economic sustainability can only be achieved with a new social contract that raises revenues fairly, manages them responsibly, and funds services and programmes that allow everyone to realise their rights.

The rejected Finance Bill, 2024, in the context of an IMF programme with Kenya, was expected to raise US$2.7 billion (KSh 346 billion) in additional revenue in the current financial year, which began on July 1, in part to meet IMF targets.

The Bill included several new tax provisions, such as removing exemptions from certain food items and a mobile money transfer tax that would increase the cost of essential goods and services and fall heaviest on Kenyans with lower and middle incomes, as well as the marginalised groups such as women and youth.

The IMF programme was approved in 2021 to support Kenya’s response to the COVID-19 pandemic and global inflation, as well as the devastating cycles of droughts and floods made worse by climate change. An increase in interest rates has also forced the government to spend upward of half its tax revenue to service debt.

According to the advocacy group, the government has other options to raise revenue progressively and enhance Kenyans’ trust in it. Human Rights Watch says that Kenya’s tax-to-GDP ratio is around 15 percent, the minimum threshold, according to the World Bank, for a viable State and economic stability.

The international NGO adds that the government could introduce tax reforms to enforce existing tax rules better, tackle mismanagement and corruption, and increase taxation on the wealthiest. “Taxes on industries or products that harm the environment should also be designed so that they do not undermine rights, such as by using the revenues raised to compensate for their effects on low and middle-income people.”

Under human rights law, governments and the international financial institutions that support them are required to respond to economic crises in ways that work to protect and advance rights.

They are expected to conduct and publish human rights impact assessments to ensure that proposed reforms, including fiscal policy and public spending, best fulfil their citizens’ economic, social, and cultural rights, paying special attention to risks to women and economically marginalised groups.

These assessments should be transparent, include public participation, and shape the measures that are ultimately enacted.  

Already, the IMF has committed US$4.4 billion (KSh 571.45 billion) to Kenya, and the World Bank anticipates US$12 billion (KSh1.55 trillion) in support from 2024 to 2026. Yet, the programme negotiated with the IMF requires steep spending cuts and increased revenues.

Last month, in June, the IMF, in a statement, commended the Finance Bill, 2024, and the 2024/2025 financial year’s proposed budget as being in line with the required “sizeable and upfront fiscal consolidation,” referring to reducing public expenditure or increasing revenues.

According to the Independent Evaluation Office, an independent IMF unit, research has shown that these measures tend to worsen inequality, and a large upfront fiscal consolidation can be particularly damaging.

Additionally, a British advocacy group, Tax Justice Network, ranks Kenya as highly complicit in helping multinational corporations underpay corporate income tax. It points out that Kenya loses US$190 million (KSh24.67 billion) annually in global tax abuse, which is largely committed by multinational corporations.

The Tax Justice Network states that this amount is equivalent to 9.5 percent of the country’s budget for health and 4 percent for education. In 2023, corporations had a tax compliance rate of 70 percent, according to data from the Kenya Revenue Authority (KRA).

The human rights advocacy groups argue that many African countries’ problems, including Kenya’s, could be solved if multinational lenders, in collaboration with governments, align their economic policies with human rights on every level.