While ushering in the new year at State House in Mombasa on January 1, President William Ruto said his government was committed to sustainably driving the economy in 2023.

The President said he had taken time to lay a foundation during his first days in office by ensuring the economy is founded on sound economic policies. “When I came into office, I had to make difficult decisions about our economy because we were not doing well,” he said. 

President Ruto said that he had taken a bold measure to ensure the country recovers economically by removing subsidies which were initially a strategy deployed for political expediency for that time because the country had an election. 

He acknowledged that the country had experienced a myriad of challenges stemming from the pandemic and the Russia-Ukraine conflict but expressed optimism that the year 2023 would look up.

On his part, Azimio la Umoja One Kenya Coalition Party leader Raila Odinga also acknowledged the challenges Kenyans faced in 2022. He, however, said he looked forward to a robust conversation on ways to improve the constitution and governance institutions.

With the promise of reviewing the listless economy and putting more money in the pockets of small traders, informal workers, and others living hand to mouth, President Ruto, whom many Kenyans call “Zakayo” after the biblical tax collector Zacchaeus, who extracted every last penny from citizens’ pockets started to impose new taxes, and the cost of everything from petrol to electricity and food went up, leaving many Kenyans disenchanted. This has made his administration receive harsh feedback from some citizens.

Maandamano

During the first quarter of the year, the opposition coalition started rallying its supporters to call on the government to address multiple grievances, including reducing the high cost of living and opening the election servers for 2022 presidential voting. 

Azimio leader Raila Odinga led the mobilisation, first calling for nationwide protests in March. This first round of demonstrations ended on April 2, after President Ruto and Mr Odinga agreed to address the issues raised by the demonstrations through a bipartisan parliamentary dialogue process.

After a month-long pause, Azimio coalition and Mr Odinga again called supporters to the streets, and Kenya saw a second spike in unrest in May. The main point of contention was the membership and composition of the government side in the talks.  

Similar to the demonstrations in March, the majority of the protests were violent. While the demonstrations were largely limited to Nairobi, other towns in the western region, typically Azimio support bases, were also affected.

On September 6, Parliament established the National Dialogue Committee (NADCO) to facilitate dialogue and consensus building and to propose reforms to address issues of concern to Kenyans. It was set up against a backdrop of the closely contested 2022 General Election and the countrywide protests organised by the opposition. The committee was a bold initiative to forge elite consensus and stabilise the state. On November 25, NADCO presented its report Read More

Taxes and Inflation

The year saw the Finance Act 2023 being enforced. The Act is expected to generate more than USD 2.1 billion for the government’s depleted coffers. It also included new taxes or increases on the price of basic goods such as fuel, food, electricity, and mobile money transfers, as well as a controversial levy on all taxpayers to fund the housing scheme.

The government said the taxes would help create jobs and reduce public borrowing, but many Kenyans have been struggling to make ends meet. 

According to the latest report, by research firm TIFA, which was released on December 13, 2023, 84 percent of Kenyans consider the country’s current economic condition worse than in 2022. 

In the “End of 2023: President Ruto’s Government Performance” report, eight percent of Kenyans termed the current economic condition similar to 2022 while seven percent said it was better. Further, 87 percent said they reduced personal expenditure to adjust to the cost of living, mainly across transport, clothing, and entertainment.

In the report, Kenyans gave President Ruto a positive score in protecting forests, supporting agriculture, combating pollution and contamination, as well as encouraging tourists and investment in tourism. However, they scored him poorly in reducing Kenya’s debt and donor financial dependence, reducing corruption, creating jobs, and reducing the cost of living.

When asked about the greatest challenge they think the Kenya Kwanza administration faces, respondents cited inflation and cost of living (39%), corruption (15%), debt repayment (8%), opposition pressure (4%), declining value of the shilling (3%), and unemployment (2%).

Currently, there is public anger as the majority of Kenyans battle the high cost of living amid tax hikes, slashed subsidies and high fuel prices which have led to a spike in the price of commodities. Additionally, high inflation and a weakening shilling have also increased the country’s debt repayment costs. Data from the National Treasury shows that Kenya had accumulated more than Ksh10.1 trillion (USD 66 billion) in debt by the end of June 2023. 

However, President Ruto has defended his economic policies. During the 60th Jamhuri Day celebrations in Nairobi, the President said that the country had emerged “safely out of the danger of debt distress.” He said the inflation rate was 6.8 percent, down from a high of 9.2 percent in 2022. 

“In the last six months, our Gross Domestic Product (GDP) has grown at 5.4 percent, making Kenya the 29th fastest growing economy in the world, according to the World Bank,” the President said, nonetheless he did not provide any figures on the current levels of debt. 

President Ruto on the global stage

During the year, President Ruto emerged as a prominent African leader on the global stage Read More. Since the beginning of the year, high-profile visitors have visited the country, elevating President Ruto’s profile.   

Judicial rulings

The judiciary issued several rulings that do or may block the implementation of several initiatives of the Kenya Kwanza administration, from the appointment of CASs, Finance Bill, and Housing levy among other rulings. 

The High Court termed the creation of the 50 CAS positions unconstitutional. A three-judge bench found that the law was not complied with in the establishment of the said office.

Another major blow was when the High Court affirmed its orders to freeze the Finance Act, of 2023. However, the Court of Appeal overturned the freeze orders weeks later after the National Treasury Cabinet Secretary Njuguna Ndung’u argued that the government was losing half a billion shillings a day as a result of the freeze. 

The High Court declared the new Social Health Insurance Fund Act unconstitutional due to its exclusion of access to services for those who do not contribute to the Fund. The same court stopped the privatisation of Mombasa and Lamu ports in response to a petition from citizens who claim it is a ploy to allow their acquisition by “desired interests” while undermining the role of the Kenya Ports Authority (KPA).  

Another court declared the Housing Levy contained in the Finance Act of 2023 unconstitutional because it is discriminatory but left it in place while giving the government until January 10, 2024, to appeal. 

The High Court blocked the roll-out of the Government’s new ‘Maisha Namba’ national identity card system, claiming the proposed system lacks sufficient data protection and that the process establishing it failed to meet the public participation requirements of the Constitution.

In response, the President declared that any legal or constitutional shortfalls in these pieces of legislation or proposals shall be “rectified” through amendments to be drafted and taken to Parliament or addressed directly through judicial appeal. 

Other developments

At COP28, President Ruto called for a global carbon tax at the Climate Summit in Dubai, but many predict that would lead to higher fuel costs. 

The Federation of the Evangelical and Indigenous Christian Churches of Kenya criticised the government in general and the National Dialogue Committee (NADCO) for failing to address the high cost of living adequately. 

Similarly, the Controller of Budget announced that the recurrent expenditure of counties (beginning with salaries) was nearly equal to the amount spent on development – with 11 counties spending less than 20 percent of their budgets on the latter.

The Controller of Budget, Central Bank of Kenya Governor, and the National Treasurer CS decried the poor state of government finances, citing various unpaid statutory deductions, among other ills, including a decreasing proportion of development expenditure. However, the President and his Deputy Rigathi Gachagua assert that the economy was “on the mend” with better times ahead for all Kenyans.