26.4 C
Accra
Tuesday, December 24, 2024
WorldWilliam Ruto’s bold move to scrap subsidies in Kenya

Date:

William Ruto’s bold move to scrap subsidies in Kenya

Kenya’s President William Ruto has surprised the nation by scrapping a subsidy on petrol which has increased the retail price to an all-time high in his first major policy announcement.

This comes at a time when  leaders around the world are introducing subsidies to protect people from the rising cost of living.

This has led to something of a backlash on social media, while analysts warn he risks losing support right at the start of his time in office, after narrowly winning last month’s election.

“I stopped driving to work some months back and now I’m worried my commute will become too expensive in case matatus [public service vehicles] hike fares,” Nairobi resident John Maina told the BBC.

President Ruto based his election campaign on a populist “Hustler” narrative – promising to improve the lives of ordinary citizens, create jobs and lower the cost of living, while emphasising his own poor background.

One of his campaign pledges was to remove taxes on fuel to lower its cost and so reduce the cost of basic commodities.

But in his inaugural speech, the president announced the end of the subsidy programme, saying it would cost the country $2.3bn (£2bn) by the end of the current financial year, in June 2023.

“This is equivalent to the entire national government development budget,” he said, adding that the subsidy had failed to achieve the intended purpose of lowering the cost of living.

Economists agree that subsidies are unsustainable for Kenya and are often just an opportunity for people to swindle money but in the short-term, ordinary Kenyans will feel the pain of a 13% increase in the cost of a litre of petrol to $1.49.

But analysts warn that the president could pay a political cost.

“The impact will definitely be felt because the price of everything is bound to increase,” Herman Manyora told the BBC.

He said there was no need to rush such a big decision even before a new government was formed because it made it look like “one man’s decision rather than a well-thought government decision”.

President Ruto is yet to appoint cabinet ministers who will then require parliament’s approval before taking office.

Analyst Javas Bigambo agreed, and said Mr Ruto should have taken more time to explain it to Kenyans first, and also to explain how the money would be used elsewhere, in order to garner public support for the move.

Mr Ruto also said he would not be renewing a subsidy which had halved the cost of the staple food, maize flour, which was introduced just before the elections.

Kenya is currently struggling with record debts and under the terms of a loan with the International Monetary Fund (IMF), it had to remove the subsidies, which describes them as “regressive”.

“The benefits of these subsidies tend to accrue to richer households [more] than poorer households,” said IMF Africa director Abebe Selassie.

President Ruto has maintained a small subsidy on diesel – used mostly by transporters and manufacturers, and kerosene – which is crucial to rural households for cooking and lighting.

And while removing subsidies on fuel and maize flour, he said he would instead reduce the cost of fertilizer, which has also shot up since Russia’s invasion of Ukraine.

Kenya does not produce enough maize to feed itself and he wants to increase national production.

“Our strategy to bring down the cost of living is predicated on empowering producers,” said Mr Ruto, who enjoys huge support among Kenya’s farming community.

The new administration therefore said it would provide 1.4 million 50kg bags of fertiliser at $29, down from the current market price of $54, beginning on Monday.

But if these decisions don’t lower the cost of living in the coming months, Mr Bigambo warned that President Ruto’s popularity could take a big hit.

“It will depend on how many other things he does right. If the decisions will not lower the cost of living within the next six to eight months then the joy of the ordinary citizens will not last long,” he said.

 

[forminator_poll id="710479"]

Latest stories

NPP to set up committee to review defeat in 2024 polls

The New Patriotic Party (NPP) has revealed its intention...

We cannot release results with GHS25m – WAEC to govt

The West African Examinations Council (WAEC) has expressed frustration...

Govt misses T-bills target as interest rates near 30%

The government narrowly missed its treasury bills target as...

NPP issuing last-minute appointments to sabotage us – NDC

The National Chairman of the National Democratic Congress (NDC),...

280 NPP members, including Cynthia Morrison expelled for violating party ethics

The Agona West Constituency of the New Patriotic Party...

Ruto expands cabinet to include more opposition to secure national unity

Kenya’s President William Ruto has brought more opposition leaders...

OB Amponsah makes history with 4,000-seat Comedy Show

Ghanaian optometrist and comedian OB Amponsah made history by...

Related stories

Biden grants full pardon to son Hunter amid criminal sentencing

US President Joe Biden has granted a full and...

Court issues 2-year suspended death sentence to former Bank of China Chair for bribery, others

Former Bank of China chairman Liu Liange on Tuesday received...

Ghanaians among UN peacekeepers injured in Southern Lebanon attacks

The UN peacekeeping force in southern Lebanon has reported...

Russia denies Trump told Putin to restrain Ukraine war efforts

The Kremlin has rejected media reports suggesting that US...

More than 100 detained as protesters defy Amsterdam’s ban on protests

Dozens of pro-Palestinian protesters were arrested in Amsterdam on...

Traffic jam erupts as cyclists from Zhengzhou to Kaifeng for dumplings

A social media trend that began as a lighthearted...

Adin Ross wins $1.6m on Trump election bet after public endorsement

American streamer and social media influencer Adin Ross scored...