The Kenyan Medical Association (KMA) has reported the deaths of 13 protestors and the injury of 31 others during ongoing protests against the Kenyan government’s fiscal reforms that are backed by the International Monetary Fund (IMF).
The protests began on Tuesday the 18th, despite the Kenyan government amending the Bill’s most contentious statutes such as the changes to the Income Tax Act, Value-Added Tax (VAT) Act, Excise Duty Tax, and Tax Procedures Act, on the same day.
What You Need to Know
The country’s 2024 Finance Bill was introduced to the National Assembly, in which President William Ruto’s Kwanza alliance holds a majority, on May 9th.
On June 11th, the IMF announced it had reached a staff-level agreement with the Kenyan government regarding Kenya’s Extended Fund Facility (EFF), Extended Credit Facility (ECF) arrangements, and the second review under the Resilience and Sustainability Facility (RSF) arrangement.
The IMF said in a statement, “Despite these positive developments [inflation deceleration], a significant shortfall in tax revenue collection and deterioration in the primary fiscal balance in FY2023/24 relative to program targets is expected to keep domestic borrowing needs elevated. As a result, interest payments have increased, putting pressure on public debt even after the latter benefited from a strengthened shilling.
“A sizable and upfront fiscal adjustment in FY2024/25 will be needed to correct the course. To this end, the authorities have taken decisive steps towards fiscal consolidation by introducing several measures in the context of the draft 2024/25 Budget and the 2024 Finance Bill. Importantly, the latter centers on measures to broaden the domestic tax base, through rationalization of various tax expenditures, in line with recommendations in the Medium-Term Revenue Strategy. Enhancing tax compliance and increasing the efficiency of expenditures through public expenditure and wage bill reforms, state-owned enterprise restructuring, rationalizing unproductive current spending, and better targeting of subsidies and transfers while ringfencing social and development spending will be key to enhancing the credibility of the consolidation strategy in FY2024/25 and the medium term. Additionally, the social safety nets and the fiscal risk management framework need further strengthening.”
Currently, Kenya’s public debt is 68 percent of its annual revenue, which is far higher than the 55 percent threshold recommended by international financial institutions such as the World Bank and IMF.
Initially, the Bill sought to raise Ksh 2.7 billion ($21 million dollars) in taxes to up its repayments on debt interest, as currently 37 percent of the nation’s annual revenue goes towards interest repayments.
The Bill tabled a 2.75 percent income tax on the country’s national healthcare plan, a 16 percent VAT on bread, sugar, vegetable oil, financial services, and foreign exchange transactions, a 2.5 percent motor vehicle tax, and a levy on products deemed ‘environmentally damaging’.
However, Ruto’s Parliamentary alliance, Kwanza, on June 18th announced amendments to the Bill, stating “the changes to the Finance Bill have taken into account the views of the people and other stakeholders during public participation sessions.”
“The Finance Bill has been amended to remove the proposed 16 percent VAT on bread, transportation of sugar, financial services, foreign exchange transactions as well as the 2.5 percent motor vehicle tax. Additionally, there will be no increase to mobile money transfer fees, and excise duty on vegetable oil has also been removed. Levies on the Housing fund and the proposed one on Social Health Insurance will not attract income tax, putting much more money in the pockets of employees. The proposed Eco Levy will only be imposed on imported finished products that contribute to e-waste and thus harm the environment when they are no longer in use, ” the statement said.
Nonetheless, large demonstrations against the Bill began across the country on Tuesday and continue today, with the key cities and towns of Nairobi, Mombasa, Eldoret and Garissa all scene to mass protests . Most notably, yesterday, protestors attempted to storm Kenya’s Parliament building in Nairobi, with police attempting to disperse the crowds with tear gas and water cannons.
Once the protestors had broken through police lines, a fire was lit at a section of the building, prompting the evacuation of the buildings occupants through an underground tunnel. Police then began firing live rounds at the protestors, killing five instantly, with another 7 succumbing to their wounds today, with one protestor thought to have been killed outside of Nairobi. Scores have been injured, with the Kenyan Medical Association stating it “strongly condemns the recent acts of police brutality and the use of excessive force against members of the public and healthcare professionals providing emergency medical services to injured protestors in the ongoing national protests. These actions by law enforcement agencies undermine the principles of a just and democratic society and have contributed significantly to the morbidity and mortality witnessed over the last few days.”
At the same time, President Ruto in a statement today said that “it is very painful for Kenya, that a conversation this crucial was hijacked by dangerous people who have caused us the kind of loss we have incurred as a nation today. It is possible that that the criminals who reigned terror on innocent people and attempted to challenge our law enforcement deployments are still determined to continue with their dangerous behaviour. I assure the nation of the government’s determination to fulfil its constitutional duty of protecting the people of Kenya against all forms of harm that the security infrastructure established to protect our republic and its sovereignty will be deployed to secure the country and restore normalcy.”
This evening, Kenyan opposition leader, Raila Odinga, under the Azimo la Umoja (Resolution for Unity) coalition party released his party’s statement denouncing the ‘murder of Kenya’s children over the Finance Bill.’
While calling for dialogue between citizens and the government, Odinga also called on “the East African Community, the African Union and the United Nations to immediately be seized of the unfolding situation in Kenya to save lives and the country. I mourn with the families that have lost loved ones and stand with them in the ongoing struggle for justice and economic liberation.”
So, What Now?
According to Internet Society, disruptions to Kenya’s internet did occur yesterday, as protestors attempted to storm the Parliament building. However, Internet Society’s Director, Ian York states that “we cannot verify whether the disruption was due to actions of the Kenyan government or as a result of the submarine cable outage as indicated by Safaricom and Airtel. The situation is extremely tense and chaotic in Nairobi right now, and communication from within the region is challenging.
In addition, Al-Jazeera has reported on at least three instances of abduction in the country. Gabriel Oguda, Kevin Monari and John Franch Ngemi, all social media activists, have been reportedly taken by ‘unknown gunmen’ since Monday.
While President Ruto calls for calm and national dialouge, opposition groups, such as Odinga’s Azimo la Umoja have made use of the situation to call for his stepping down.
It is likely that the death of the 13 protestors will embolden protestors, who are mostly Kenyan youth, to step up their protests. However, the Kenyan police’s use of live rounds yesterday could instead act as a deterrent and prompt a scaling down of the actions of protestors in the coming days.