The downgrading of Kenya’s sovereign bond to junk status by rating firm Moody’s after widespread protests is a warning to President Ruto and his administration to take urgent and comprehensive action to stabilise the economy and restore trust.
The downgrading indicates a lack of confidence in Kenya’s ability to meet its debt obligations, which can have serious repercussions for economic stability and make it more difficult to even secure loans.
This adds to Kenya’s challenges and complicates Ruto’s task of reassuring domestic and international stakeholders that his administration is committed to fiscal responsibility and transparency. However, this is exactly what Ruto must strive to achieve, and time is of the essence
.
Let’s face it. The rejection of the 2024 Finance Bill was not just about the bill itself but also a broader critique of the government’s economic policies. High taxes, rising living costs, and limited job opportunities have left many feeling marginalised and ignored. Public dissent and violent demonstrations against the finance bill are clear indicators of the frustration among Kenyans, particularly younger people, who are bearing the brunt of economic hardship.
The high unemployment rate, especially among the youth, has been a significant factor in the recent unrest. Whatever the President and his advisers do, they must start by finding a solution to joblessness among Gen Z.
Joblessness hampers economic growth and helps fuel social instability in tough times. The government must focus on sectors that have the potential for high growth and employment generation while also laying the groundwork for long-term economic development.
In the technology sector, for instance, the government can support startups and tech hubs that are innovating solutions to local problems. They must seek resources and provide grants, reduce bureaucratic red tape, and create a more favourable regulatory environment to encourage entrepreneurship and attract foreign investment.
Going forward, the government must intentionally support small and medium-sized enterprises, the backbone of the economy, as they have the potential to absorb a large portion of the unemployed. They need access to affordable credit, lower taxes, and greater competitiveness.
To restore the trust of citizens, investors, and the international community, the team in charge of auditing the national debt and government expenditures must quickly identify areas where funds have been misallocated or mismanaged, and these findings must be made public.
Officials must also prioritise renegotiating the terms of existing debt to secure more favourable conditions. A sustainable debt management strategy should also be implemented to ensure responsible future borrowing. This must entail setting clear guidelines on the maximum allowable debt levels and ensuring that borrowed funds are used for projects that generate economic returns.
Kenya must ensure that government spending is aligned with national priorities and that there is minimal wastage of public resources. This means cutting non-essential expenditures and reallocating resources to critical areas such as healthcare, education, and infrastructure. Such fiscal prudence will not only improve services but also signal to investors that Kenya is committed to sound economic management.
Restoring public trust also requires that the administration strengthen anti-corruption institutions.
To address the grievances of Gen Z, Ruto must focus on education and skills development. Young people need to be equipped with the skills required for the jobs of the future. This not only addresses immediate joblessness but also ensures that Kenya has a competitive workforce that can drive future economic growth.
If Ruto focuses on enhancing transparency, job creation, sustainable debt management, fiscal discipline, education, and stamping out corruption in his government, the administration will have tried to address most of the root causes of public discontent.
— The writer is People Daily’s Business Editor
