Leaders out to extract political capital from fuel crisis

A worker at a petrol station in Nairobi. [File, AFP]

History tends to elevate leaders forged in adversity. Winston Churchill and Franklin Roosevelt rose to prominence amid the upheaval of the Second World War, their reputations burnished by resolve under pressure. Others were scoundrels who secured a more ignominious place in the historical record.

The current turmoil in the Middle East too carries global consequences that may yet distinguish the capable from the wanting amongst today’s leaders. Nearer home, the conflict has triggered an energy squeeze. Vital petroleum supplies, essential to the functioning of the economy, have become ensnared in supply chain disruptions that lie beyond the immediate reach of local policymakers.

Yet a segment of the country’s political leadership continues to agitate for nationwide protests over rising fuel prices. In doing so, they elide the distinction between pump costs and the broader cost of living, folding both into a wider indictment of governance and assigning culpability squarely to the Kenya Kwanza administration. But do such claims withstand scrutiny?

It is widely recognised that today’s elevated cost of living did not originate with the current administration. Rather, it is a legacy of the Jubilee administration, which accumulated substantial public debt through heavy borrowing, often for projects whose benefits to citizens were neither immediate nor evenly distributed. The KK administration has sought to mitigate these pressures, notably by restructuring the debt to achieve a more manageable maturity profile. Some easing in the cost of living has been observed. Even then, the underlying imbalances are deep-seated and their resolution is likely to be gradual rather than swift.

Global petroleum prices lie largely beyond the remit of the KK government. They are determined primarily by Platts, the industry’s benchmark for price discovery. This benchmark establishes the base price of oil. What the government negotiates with international suppliers is the premium, an increment added to the base. It reflects costs such as shipping and logistics.

Domestic prices are then shaped by taxes imposed when fuel enters the country, each serving a purpose and carrying wider consequences if removed. Value-added tax on petroleum products, for instance, was introduced as part of conditions set by Bretton Woods institutions for financial support. Altering it may affect future engagements.

Other levies are earmarked for infrastructure. The Railway Development Levy helps service the Standard Gauge Railway, while the Road Development Levy underpins maintenance of the road network and finances new construction essential for economic expansion. Such fiscal instruments, though unpopular, anchor public investment and debt obligations. Any attempt to pare them back would require compensating revenues or spending cuts, choices that are economically and politically exacting in the short term.

Against this backdrop, calls for street protests risk appearing less as principled civic action than opportunistic attempts to extract political capital from an international crisis. The government has already reduced VAT on petroleum products from 16 per cent to 8 per cent, a move that could potentially complicate further lending arrangements with Bretton Woods institutions.

Yet such appeals for protests, framed in the language of patriotism, are made in full awareness that, in a climate already charged with accumulated public frustration, they could easily tip into disorder. Citizens may do well to be mindful of English writer Samuel Johnson’s admonition that sometimes, “patriotism is the last refuge of a scoundrel.”

Mr Khafafa is a public policy analyst