Is Kenya Headed to a Major Economic Slump Down?

Kenya might be heading to a major economic recession as the government struggles to finance its deficit. The transport sector continues to pay the heaviest price as the government through the Energy and Petroleum Regulatory Authority (EPRA) has chosen to increase fuel prices.

Kenyans turned to social media to complain about the increase. According to a statistical survey conducted by Nation Media Group comparing the fuel prices of the three East Africa countries, Kenya’s price was the highest. The average petrol price in Kenya is Kshs.122.81, in Tanzania is Kshs.93.67 and in Uganda is Kshs.116.22.

Kenya’s debt of about Kshs.9 trillion has already hit the ceiling. Earlier this year, the government of Kenya indicated that it had planned to raise the debt to Kshs.12 trillion. Kenyans should brace for tougher times ahead as they will bear the burden of financing the loan, which might take eons to repay.

Treasury Cabinet Secretary Ukur Yatani recently claimed that the government will seek Kshs.124 billion Eurobond loan to repay the country’s maturing loans. 

As the country continues struggling to meet its financial targets, the government of Uhuru Kenyatta plans to hold a national plebiscite to amend the constitution.

The Building Bridges Initiative (BBI) that seeks to alter Kenya’s constitution was endorsed by a majority of County Assemblies. It is yet to be approved by the Senate and the National Assembly, before being sent to the people for final approval.

Covid-19 pandemic exacerbated the problem as the government fall short of its revenue target. The pandemic led to massive job losses and business shut down. The government cushioned low-income earners during the nascent stages of the pandemic by cutting down on their tax collection.