On a chilly Wednesday morning, Winnie Njoki stumbles into the veterinary kiosk where she works in downtown Nairobi. Her rubber shoes are soggy, having waded through pools of water and rivulets all over the city streets after a night of a heavy downpour.
She lives in Kayole, a satellite town in Nairobi which is not too famed for the best sanitation facilities nor security.
Njoki makes Sh900 a day. This may tempt one to dismiss her case when talking about the suffering low income earners and casual labourers in town, but far from it. She is the mother to a two-year old girl and is the sole breadwinner of the small household.
Every morning, a day-time nanny, Christine Njeri, comes to Njoki’s house where she spends the day taking care of the baby while she works. The nanny charges Sh200 a day.
Njoki parts with fees for the nanny and money for lunch for the two, often a total of Sh400. She then walks to the bus stop where she parts with an extra Sh100 fare to town.
Falling wages
If Njoki decides to take lunch herself, of say Sh100, and buy airtime worth the same amount, she will be left with Sh200, Sh100 of which is fare back home. “I live from hand to mouth. I am unable to make savings. Everything I make every day is used up before sunrise of the next,” she says, changing into another pair of rubber shoes she has bought off the street.
This is the plight of many small scale retailers in the city. They have families to feed. Their wages are falling. The cost of living is rising. Their purchasing power is declining.
With Treasury Cabinet Secretary Ukur Yattani reading a Sh2.73 trillion budget today in which he presents the determination to rebuild the economy, it is highly unlikely Njoki, and other small scale traders, will feel any benefits.
This budget is going to be an additional weight on the backs of Kenyans who are struggling to make ends meet.
Treasury expects to raise Sh1.6 trillion in taxes from a battered economy. Businesses have closed, individuals have seen their jobs go down the drain, but the Government, desperately in need of the billions, is planning to tax retirement benefits of people in their sunset years.
Treasury has also proposed to tax monthly pensions for people aged 65, who are currently tax exempt. It also proposes to subject income earned by the National Social Security Fund (NSSF) to income tax.
And even those who thought that they would acquire property through the home ownership saving plants (HOSPs), which have been tax sheltered saving plans that are aimed at enabling first time home owners put away money they can use in acquiring a home, will now have to incur income tax.
Yatani wants to speed up the flow of money in the economy, but with people still immobilised by a night curfew (which has been reduced but is still impacting heavily on business), partial lockdowns of Nairobi and Mombasa and a ban on all kinds of social gatherings, it is unlikely there will be economic activities that can provide the National Treasury with enough taxes to fund the expansive budget.
The burden will soon become unbearable for the common mwananchi, with farmers also being roped in among those who will incur heavy prices in buying farming tools.
Just about a month ago, Treasury, in the Tax Laws (Amendment) Act, 2020, imposed a 14 per cent Value Added Tax (VAT) on farm implements. The Kenyan farmer, who can best be depicted as something of a slave on his own land, faces these debilitating measures on the back of devastating floods, locust attacks and low prices for their produce and the Covid-19 pandemic.
Agriculture, which contributes 26 per cent to Kenya’s economy, will struggle under the impact of this blow. This is not the first time Treasury is imposing taxes on inputs to agriculture. The government imposed a 16 per cent tax on pesticides in the last financial year and was projected to skyrocket food prices.
Farmers have also had to contend with high cost of seeds, fertiliser and pesticides.
The average Kenyan may continue to wallow in misery if status quo persists, with counties defaulting on payment of pending bills at alarming rates and small scale suppliers desperately hanging on for dear life.
What’s worse is that most of these people, solely dependent on their small businesses, are staring at starvation, what with Covid-19 wreaking havoc and reducing people’s purchasing power.
As at February 3, 2020, the amount of eligible pending bills paid was Sh31.42 billion, leaving an outstanding balance of Sh219.87 billion. The exchequer failed to reveal when the balance would be paid, compounding suppliers’ deep misery.
As middle and low class Nairobi dwellers suffer, only passing of a Supplementary Appropriation Bill would save them against further ravages of the pandemic.
With the residents locked inside the county and starvation lurking, something needs to be done to cushion them.
Lay offs
The nationwide curfew, which was initially enforced dusk to dawn until Sunday when it was whittled down to seven hours, alongside cessation of movement into and out of some counties, has meant that companies and individuals close their businesses as early as 4pm, a far cry from when the city ran around the clock.
Closure of major businesses such as hotels and related facilities that employ thousands of casual labourers, and a ban on importation, have further participated in worsening the situation.
Before Covid-19, Njoki used to make up to Sh3,000 a day.
In Hunters, Kasarani, Carol Kariuki has set up a small shop where she is selling houseware such as utensils.
She was working for Bic on a contract that was always renewed every four months. But upon its expiry in April, Kariuki, alongside many others, was sent packing.
“We were laid off in May. The company’s sales have been falling and production has thus stalled,” says Kariuki.
She had, intuitively, saved close to Sh100,000 which she invested in her shop.
Most of her counterparts were not as lucky. With the firing came the freefall into desperation.
And although she has started business at a low, forced to sell her wares for minimum profits as people complain of low purchasing power, she is grateful she can survive.
