Kenya’s economic policy landscape is currently under scrutiny as the Finance Bill 2024 faces opposition from various sectors. Despite widespread concerns about its potential negative impacts, there is a prevailing sentiment that the proposed tax measures will likely pass. This article delves into the dynamics of Kenya’s economic policymaking, the influence of international institutions, and the challenges faced by domestic stakeholders.

Parliament’s role and limitations

Traditionally, Parliament serves as the voice of the people, tasked with providing checks and balances, particularly on economic matters. However, recent developments suggest a diminishing sense of efficacy within the legislative arm. Many perceive that ultimate decision-making power lies outside the national borders, primarily due to Kenya’s engagement in structural reforms led by the World Bank and the International Monetary Fund (IMF).

The grip of international institutions

Kenya’s alignment with international financial institutions like the IMF and the World Bank has profound implications for its economic policy autonomy. The current phase of structural reforms, often a condition for accessing financial assistance, has placed significant constraints on domestic decision-making. The Finance Bill 2024, if passed without critical revisions, could exacerbate the country’s economic woes, as highlighted by various sectors, including manufacturing, finance, and consumer goods.

Concerns and lobbying efforts

Multiple sectors, including the Kenya Association of Manufacturers (KAM), have vehemently opposed certain provisions in the Finance Bill. The eco levy and proposed amendments affecting manufacturers’ ability to offset raw material costs on excise duty have drawn particular ire. Despite lobbying efforts directed at Parliament and the Treasury, stakeholders realise that the locus of economic policymaking has shifted away from traditional channels.

A mirrored history

Kenya’s current economic predicament evokes memories of past challenges, notably the debt crisis of the 1980s and 1990s. During that era, policies influenced by Bretton Woods institutions, such as the IMF, imposed austerity measures that stymied the country’s growth trajectory. The ramifications of those structural adjustments continue to reverberate in Kenya’s economic landscape today.

Potential results

Most, if not all, organisations with a market presence in the country have now threatened to withdraw their services or functions if the finance bill is passed. This will greatly affect employment, as most people will find themselves without an employer and create a market crisis once again.

As Kenya grapples with the impending passage of the Finance Bill 2024, the tension between domestic interests and international influence underscores the complexity of economic policymaking. While Parliament ostensibly represents the people, the reality of external pressures from institutions like the IMF complicates the pursuit of sovereign economic strategies. The outcome of this struggle will not only shape Kenya’s immediate fiscal landscape but also influence its long-term developmental trajectory.