President Ruto had to back down due to widespread demonstrations over Kenya’s Finance Bill 2024. Examine the reasons for the turmoil and the effects they may have on Kenya’s economy.
Over the last week, Kenya has seen extensive demonstrations and turmoil in reaction to a contentious new financial law that was approved by parliament. The proposal, which aims to increase tax income in order to address the nation’s growing debt, has encountered strong criticism from those who are already having difficulty keeping up with increasing living expenses. President William Ruto made a major concession to popular demands when he said he would not sign the measure into law, after violent protests and increased pressure.
The Divisive Finance Law
The main cause of the discontent is the Finance Bill 2024, which sought to generate an extra $2.7 billion for Kenya’s already precarious state budget by proposing a number of new levies and hikes to current ones. Some of the bill’s most important provisions were:
- A new Value Added Tax (VAT) of 16% on bread and other foundational foods
A major component of Kenya’s digital economy, mobile money transactions, are subject to higher taxes. - A new 2.5% yearly tax on automobile owners
“Environmentally damaging” common items like as electronics, plastics, diapers, and packaging will be subject to new levies. Certain financial services and foreign exchange transactions would have a 16% value added tax.
The government said that these actions were required to address Kenya’s skyrocketing public debt, which is presently 68% of GDP, much higher than the 55% mark that international financial institutions advise. Kenya is under pressure to clean up its fiscal house since interest payments account for more than one-third of the country’s yearly income.
A Protest-Filled Week
Kenyans who were already experiencing inflation and financial hardship responded sharply and immediately against the Finance Bill. Before the law even made it out of parliament, protesters took to the streets under the banner of “7 Days of Rage.”
There were both nonviolent protests and violent events during the mostly youth-led protests. Some demonstrators tried to storm and set fire to the parliament building in Nairobi, the country’s capital. With water cannons, tear gas, and in some situations, live bullets, police reacted with force.
Medical officials report that the demonstrations took a lethal turn, resulting in hundreds of injuries and at least 23 fatalities nationwide. President Ruto’s designation of demonstrators as “treasonous” in reaction to the government’s harsh response received more criticism, which looked to exacerbate already existing tensions.
Public Pressure and Online Activism
Kenyans organized online to express their disapproval of the Finance Bill in addition to the street demonstrations. Using hashtags like #OccupyParliament, #RejectFinanceBill2024, and #TotalShutdownKenya, individuals coordinated protests and disseminated information on social media.
The level of popular opposition to the proposed provisions is shown by the over 111,000 signatures on a Change.org petition requesting the bill’s withdrawal. In order to exert more pressure on the government to change its position, the internet campaign was a great addition to the actual demonstrations.
Ruto’s Reversal
President William Ruto said on June 26 that he would not sign the Finance Bill into law in response to growing pressure and violence. Ruto recognized the negative reaction to the bill at a news conference and said he would return it to parliament for changes.
This was a major win for the protest movement and an unusual example of the Kenyan government caving in to popular pressure. Many activists, however, believe that the compromise falls short of their demands and are advocating for more significant adjustments to address issues of government accountability and economic injustice.
Gazing Forward
Even though Ruto’s declaration helped to ease some of the immediate anxiety, Kenya still faces significant economic difficulties. The nation still has to figure out how to raise money and control its debt load without adding further stress to a population that is already dealing with growing expenses.
Additionally, deeper dissatisfaction with Kenya’s political and economic structure has been made clear by the demonstrations. Particularly among Kenya’s youth, many believe that the country’s present systems fall short of their expectations and are advocating for more extensive changes.
All eyes will be on the government’s decision-making as this round of protests comes to an end. Will it attempt to formulate economic policies in a more cooperative manner? Or will this turn out to be only a momentary retreat before further actions along these lines are taken?
It’s evident that when it comes to important economic issues, Kenya’s authorities can no longer afford to disregard the opinions of the people. Kenyans are prepared and eager to go to the streets in order to protect their interests, as seen by the events of the last week. This new political reality will need to be considered in any future efforts at budgetary reform.
