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Kenyans should brace themselves for hard times ahead after the government yesterday revealed that it will take two years to lower the cost of living and revive the economy.

Chief Cabinet Secretary Musalia Mudavadi in his first appearance in Parliament to respond to questions, told MPs the country was in a very bad situation because of high inflation rate, cost of fuel, drought, fiscal distress, the ongoing Russia-Ukraine war and high exchange rate of various currencies.

He said while they are able to deal with short term challenges, it will still be a tough task for them to turn around the economy because of  factors such as the ongoing Russia-Ukraine war as they are not able to predict when it will be over.

“I want to state to the Kenyans people that we are in this for the long haul. The hole and the circumstances that we are in cannot be wished away by instant coffee. We are going to focus on priority and having a sustained economy. From a personal perspective, we need to be prepared to have another two years of having challenges. But there is hope. However,  no situation is permanent even the challenging times we are going through now shall be overcome,” said the former vice president.

The Prime CS  said the current delays in disbursement of funds to counties and salary delays have also been occasioned by the economic difficulties.

Be accountable

“The delays in disbursement of funds to counties, is something we want to address so that going forward, we can distance ourselves from these delays including delays we saw in salaries payment. I would like Kenyans to appreciate that these are not overnight occurrences we are going through, this is the accumulative effect of consistent omission and commission over a very long period of time. And without apportioning blame to anyone because it is our duty to get out of the hole we are in,  we also have to be ready to be accountable,” he added.

Addressing MPs on the floor of the House yesterday, on inflation, he said it has remained above the 7.5 percent upper bound of the target range from July 2022 to date, due to higher food prices resulting from reduced agricultural production, drought, global supply chain challenges, higher prices of imports due to dollar scarcity, as well as the higher global oil prices.

The Chief CS also attributed the situation to elimination of subsidies on petrol saying it was unsustainable.

On exchange rate, he revealed that since corona virus pandemic outbreak, the Kenya Shilling has since depreciated against major international and regional currencies as it exchanged at an average of Sh134.09 per USD in the month of April, 2023 compared to Sh117.29 per USD in June, 2022.

“These developments have significantly impacted liquidity in the domestic forex market. In particular, the interbank forex market transactions have declined, limiting price action in that market. The exchange rate impacts directly on the cost of living in Kenya as imported goods and services have become more expensive,” he said.

The Prime CS also said that prolonged drought over the last two and a half years, which has been recorded as the worst drought in 40 years had reduced the annual maize production, as the country recorded the lowest maize production in 10 years of about 34.4 million bags (3.1 million) in 2022 as well as lost approximately 2.5 million heads of cattle.

“It is further acknowledged that the supply chain disruptions of 2020- 2022 due to negative global events i.e. Covid- 19 pandemic and its lingering effects; the impact of Russia – Ukraine conflict, and high fuel prices have increased the percentage of food insecure population,” he added.

Duty waivers

He said that the drought has affected approximately 4.4 million people in Arid and Semi-Arid Lands, and a further 495,362 in Nine (9) non-traditional ASAL regions which have also faced acute food insecurity.

In addition, about 970,000 children below five years and 142,000 expectant and lactating women require treatment for acute malnutrition.

Meanwhile, the government has directed importers who benefited from the duty waivers granted on various food imports to extend the same to Kenyans to cushion them from high food prices.

Mudavadi told lawmakers that the government has a list of all individuals who benefitted from the waiver and thus should they continue to delay passing the benefits to farmers, unspecified action will be taken against them.

“We have a record of the people who have imported under the waiver and we look forward to them passing the benefit of that duty waiver to consumers and citizens and if they do not do this,  it means that some other steps will be taken on them.  I want to make it clear to all who have benefited from the duty waiver not to delay to pass over the same to the common mwananchi,” he said.

Mudavadi who clarified that the duty-free maize imports will only temporarily reduce the high cost of maize and flour for consumer benefit in the short term said that the cost of food will eventually be dictated by supply and demand.