Why everything is about to get out of reach for Kenyans

Judith Adhiambo, cereal trader goes about her duty at Jubilee market in Kisumu on April 17,2019. The traders like her in the market is lamenting over elusiveness of customers due to hard economic times affecting their customers. [Photo: Denish Ochieng/ Standard]

“And the hits just keep on coming.” The line by actor Tom Cruise in the 1992 movie A Few Good Men could be an apt description of the seemingly insurmountable challenges that keep cropping up for Kenyans.

At a time when many are reeling from the taxation measures that the State introduced at the start of this financial year, they now have a drought and high fuel prices to contend with - a combination of which will push up the cost of nearly everything and make worse the miserable living many Kenyans are already grappling with.

This also comes at a time when government leaders have gotten sucked into an election mode and are seemingly only focused on the next polls.

Over the last six months, the cost of some basic food items has more than doubled and as the dry spell worsens, the prices are expected to continue on an upward trend.

Along with the drought usually comes high cost of power as the country turns to costly diesel electricity generators to bridge the gap left by the hydro dams, whose contribution to the energy mix is expected to dip.

This will be in addition to the rising cost of oil in the global markets and its associated high pump prices, which will make it more expensive for manufacturers and transporters to operate, with the added costs incurred passed on to consumers.

The cost of sukuma wiki, for instance, has gone up more than four-fold in Mombasa and Kisumu while nearly doubling in Nairobi.

According to data by the Ministry of Agriculture, a 50-kilogramme bag of the vegetable that is common across most Kenyan households was selling at Sh4,000 in Mombasa and Kisumu last Thursday.

This was a sharp rise from Sh1,000 (Mombasa) and Sh1,300 (Kisumu) that the same quantity was going for in November 2018.

A similar scenario has been unfolding for Kenya’s staple, maize, whereby a 90-kilogramme bag is currently going for a wholesale price of Sh3,400, up from Sh1,900 in November.

The cost is higher in Mombasa at Sh3,800 and Kisumu at Sh4,000.

The cost of fuel in April shot up by substantial margins to reach Sh106 per litre of petrol in Nairobi. A series of taxes that have been implemented since July last year are making life unbearable.

All these add up the pain for Kenyan households but is also expected to hurt the economy. The International Monetary Fund (IMF) has recently downgraded Kenya’s growth prospects for this year, attributing it to poor rains and reduced Government investment.

In the latest World Economic Outlook, the IMF projects the country’s economy to expand by 5.8 per cent this year, a downward revision from 6.1 per cent it had predicted in October last year.

This came barely days after the World Bank revised the country’s gross domestic product (GDP) growth forecast for 2019 from 5.8 per cent down to 5.7 per cent, citing expected under-performance in the agricultural sector due to poor rains.

IMF noted that the delay in the onset of the long rains, which could affect harvests, as well as ongoing emergency intervention to address food shortages in several counties would put pressure on Government spending.

“These developments have slowed growth forecast for 2019 and for the medium-term relative to our October 2018 update,” said IMF.

Tegemeo Institute of Agricultural Policy and Development, Egerton University’s think tank, noted that the prolonged dry spell will have a devastating impact on the country’s economy.

“The drought is expected to affect the entire economy, and not just food production… This is expected to affect households adversely through increased prices (reduced disposable incomes),” said the institute in an update on the food situation in the country last Thursday.

The institute expects agricultural production to decline due to the unpredictable and unreliable rains but, worse, that the country cannot tell how much food it expects to produce.

“At the moment, the expected harvest is not known as farmers continue to face challenges in replanting, access to credit and quality inputs,” said Tegemeo.

Lack of rains will also affect the cost of power as the hydroelectricity dams reduce generation of power. These usually offer the cheapest electricity and also contribute a large portion of the power produced in the country at over 45 per cent.

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IMF projectsWorld Economic OutlookGovernmentPrice of CommoditiesKenyans