It is now clear that the promises made by Kenya Kwanza leaders to bring down the cost of living were just hot air, and that they had no intention to fulfil their election pledges because they and their economic advisers knew very well that the International Monetary Fund (IMF) would be imposing stringent austerity measures, including higher taxes, on the country soon after the elections. I would not be at all surprised if the controversial proposed Finance Bill was drafted (either in part or in full) by this international financial institution.
Why did Kenya Kwanza make these promises when they knew they would soon be in bed with the IMF if they won the election? The price of fuel and other products has gone up and a controversial housing tax has been re-introduced despite leaders such as Prime Cabinet Secretary Musalia Mudavadi previously describing a similar tax proposal in 2019 as “insensitive and burdensome” when he was campaigning for William Ruto. The so-called “hustlers” that Kenya Kwanza wooed before the 2022 elections are bearing the brunt of the rising cost of living.
Hopefully, we are all now aware of the fact that election promises in Kenya do not mean much, and that we are now firmly in the grip of the IMF. Kenya may lose its sovereignty when it comes to managing its economy, and this has far-reaching repercussions. This is why in 2021 more than 200,000 Kenyans signed a petition to the IMF to halt a KSh 257 billion loan to Kenya, which was ostensibly obtained to cushion the country against the negative economic impact of COVID-19.
Why would a country’s citizens be against a loan given by an international financial institution such as the IMF? Well, for those Kenyans who survived (or barely survived) the IMF-World Bank Structural Adjustment Programmes (SAPs) of the ‘80s and ‘90s, the answer is obvious. SAPs came with stringent conditions attached, which led to many layoffs in the civil service and removal of subsidies for essential services such as health and education, which led to increasing levels of hardship and precarity, especially among middle and low income groups. African countries undergoing SAPs experienced what is often referred to as “a lost development decade” as belt-tightening measures stalled development programmes and stunted economic opportunities.
In addition, borrowing countries like Kenya lost their independence in matters related to economic policy. The World Bank and the IMF were determining things like budget management, exchange rates and public sector involvement in the economy. They became the de facto policy- and decision-making authorities in the country. (One of the conditions for the current IMF loan is to reduce corruption in government institutions. Let’s see how that pans out.)
This is why, in much of the ‘80s and early ‘90s, the arrival of a World Bank or IMF delegation to Nairobi got Kenyans very worried. In those days (the aftermath of a hike in oil prices in 1979 that saw most African countries experience a rise in import bills and a decline in export earnings), leaders of these international financial institutions were feared as much as the authoritarian Kenyan president, Daniel arap Moi, because, with a stroke of a pen, they could devalue the Kenyan currency overnight and get large chunks of the civil service fired.
When he took office in 2002, President Mwai Kibaki kept the World Bank and the IMF at arm’s length, preferring to take no-strings-attached infrastructure loans from China. Kibaki’s ‘Look East’ economic policy alarmed the Bretton Woods institutions and Western donors who had until then had a huge say in the country’s development trajectory, but it instilled a sense of pride and autonomy in Kenyans, which sadly, was quickly eroded by President Uhuru Kenyatta’s huge appetite for loans. This is what prompted the IMF to offer its punitive services again.
When a country appears to be entering what they call ‘debt distress’ – when debt reaches an unsustainable threshold – the IMF steps in to help. But the bailout comes at a huge price. The Canadian author Naomi Klein refers to this as ‘shock therapy’ or ‘disaster capitalism’.
In her book, The Shock Doctrine, Klein shows how ‘disaster capitalism’ has allowed the IMF to administer ‘shock therapy’ on nations reeling from disaster or high levels of external debt. This had led to unnecessary privatisation of state assets, government deregulation and austerity measures, such as massive layoffs of civil servants and reduction or elimination of subsidies, all of which can and do lead to increasing levels of inequality. Klein shows how in nearly every country where the IMF medicine has been administered, inequality levels have escalated and poverty has become systemic.
Kenyans, who have already suffered financially due to the COVID-19 pandemic, which saw nearly two million jobs in the formal sector disappear, will now be confronted with austerity measures and higher taxes at precisely the time when they need government subsidies and social safety nets. Season Two of SAPs is likely to make life for Kenyans even more miserable in the short- and medium- term.
Kenya Kwanza leaders should understand that SAPs and increasing authoritarianism in the ‘80s led to a rise in civil unrest and protests that culminated in the ‘Second Liberation’ pro-democracy movement that led to a backlash against – and eventual toppling of – the Kanu regime. If the cost of living becomes unbearable for the majority of Kenyans, such a backlash could also take place against the current regime.