President-elect William Ruto was jubilated as he was announced the winner of the just concluded General Election. However, the reality of the enormity of what awaits him will sink faster than the time it will take to celebrate the win. The in-tray is full. Kenyans are hopeful Ruto has a magic bullet that will address the many challenges they face. However, with debilitating public debt and empty coffers at the Treasury, the new administration will hit the road running to address these challenges. Here are a few:
High Cost of living
The topmost issue in the minds of many Kenyans is the high cost of living. Prices of basic commodities such as maize flour, wheat flour, fuel, rice, vegetables, and cooking oil have skyrocketed with many families having to dig deeper into their pockets.
In his manifesto, Ruto said his administration would prioritise lowering the prices of basic commodities.
The outgoing administration of President Uhuru Kenyatta has attempted to bring down the cost of unga by implementing a maize flour subsidy programme that brought down the retail price of a two-kilogram packet to Sh100.
Unfortunately, most of this unga has not been available in retail stores with people engaging in panic-buying, according to government officials.
The high prices of commodities have been blamed on drought and the ongoing war in Ukraine. Poor rainfall has been blamed for the poor harvests, which has translated into higher prices of foodstuff due to a depressed supply.
With money for the subsidy programmes expected to run out by end of the month, unless something urgent is done the cost of Super petrol will rise to Sh214 and that of Diesel will go up by Sh60. A packet of unga will retail at between SH220 and Sh250.
Drought and starvation
More than three million Kenyans are facing acute hunger after the rains failed and the little they planted failed to fill up granaries. They are in need of emergency food aid.
The country’s hopes of assuaging the effect of the drought are in the short rains not failing. If they are suppressed then the number of those in dire need of food aid will skyrocket making the honeymoon period for the new government a calamitous one.
The school calendar has been disrupted by the elections and the anxiety as to when the second term will end is high. There is clarity needed on also on the Competency-Based Curriculum (CBC) with the President-elect blowing hot and cold during the campaigns. On the one hand, Ruto said the curriculum will be scrapped since it is expensive for parents.
On the other hand, he said it will not be scrapped but a team will be constituted to look at the challenges it is facing. With a double intake expected in January 2023, four months away, the sooner light is shed and policy direction is given on the education system the better.
The universities are becoming insolvent by the day and the promise to reduce the teacher deficit by half, and recruit 116,000 tutors in two years, in the first year are issues that will occupy the president-elect.
Lack of decent jobs
Unemployment - going by the strict definition of those actively looking for work - has remained at below 10 per cent, and by the end of 2020, it had reached a low of 5.4 per cent, official data shows.
Economist Dr Joy Kiiru, however, says whereas a large cross-section of Kenyans can afford food, education or healthcare, the quality of these goods and services is not good.
The problem of unemployment is acute in places like Turkana, Kenya’s poorest county. Here, four in every five people earn less than Sh108 a day on average.
Ruto, who has been championing the bottom-up economic model, has promised to boost mama mbogas, jua Kali artisans and other small-scale businesses through a special fund that will provide them with cheap loans.
In the last 10 years, the economy has consistently churned out an average of more than 800,000 jobs every year. The employment numbers look impressive, but a substantial chunk of those employed work in the informal sector or are subsistence farmers.
High taxes have discouraged investments in Kenya. Many Kenyans are not paying their share of taxes. Out of around 20 million people eligible to pay tax, only 3.7 million are compliant. Some of those who are not paying taxes see it as an irritable cost that does not have any returns.
This speaks of misuse of public funds, with most of the cash collected as taxes being misused rather than being used to improve the lives of the taxpayers. Businesses have also been wary of an aggressive tax authority. Ruto has said he will end what he described as the ‘weaponisation’ of KRA and other government bodies.
High public debt
The incoming administration will need to borrow money to address the most pressing need before they can figure out how to grow income. However, with the public debt at Sh8.56 trillion by end of May looking for lenders will be a tall order for the administration that has vowed to rein in borrowing.
This issue also found its way into the campaign trail, with candidates vowing to reduce the country’s debt.
The problem has been Kenya’s huge fraction of expensive commercial loans which has been growing steadily.
In 2013, commercial loans only took up close to 2.2 per cent of the total external loans.
Expensive loans have meant that much of the taxes are going into paying debt, crowding out other critical public services.
By the time President Uhuru Kenyatta came to power in 2013, for every Sh100 that Kenya Revenue Authority (KRA) collected, only Sh15 was used to repay interest on the debt.
But this has since more than doubled to Sh32 being used to pay interest by end of June 2023, data from the National Treasury shows.
Healthcare and sanitation
Ruto, just like his competitor former Prime Minister Raila Odinga, promised to implement universal healthcare (UHC) to ensure that every Kenyan has access to basic medical care.
Given that most Kenyans pay for their healthcare out of pocket, the majority are just one hospitalisation away from poverty.
Official data shows more than 25.36 million Kenyans are above 18 years, with NHIF having 8.898 million members.
By end of 2021, there were 13,376 doctors in Kenya, translating into 27.1 for every 100,000 Kenyans, according to figures from the Ministry of Health.
This means that one doctor in Kenya serves 3,690 people, compared to the global average of one doctor for a population of 596 according to 2017 figures by the World Bank.
This is an indication that a lot of Kenyans have no access to quality healthcare.
A lot of Kenyans are also suffering from preventable diseases due to poor sanitation.
For instance, in the last five years to 2020, Nairobi, Tana River, Wajir, Turkana and Kajiado had the highest number of cases of children below five years being infected with cholera.
Corruption and wastage
President Uhuru Kenyatta in January last year claimed that the country loses Sh2 billion every day, stolen by corrupt government officials and aided by unscrupulous individuals and firms.
Kenya ranked 128 out of 180 in the Corruption Perception Index 2021 published by Transparency International earlier in the year. This was a poorer performance having ranked 124 in 2020.
Other than corruption, there is the huge wastage of public resources by civil servants.
The Auditor General has perennially lamented how government officials spend money but do not offer any document to justify the spending.
Ease of doing business for SMEs
While they are key to providing employment today and would play a key role if the country was to industrialise, small and medium enterprises (SMEs) perhaps face the roughest conditions when doing business in the country.
Government data shows that SMEs constitute 98 per cent of all businesses in Kenya and create 30 per cent of the jobs annually. SMEs' contribution to the GDP stands at three per cent.
There is a consensus that SMEs are grossly underperforming and their contribution to the economy could even be bigger were it not for the multifaceted hurdles they face.
Other than the heavy tax burden that they have to bear, they are also subjected to various licences, fees, permits and cess that in end have a major impact on their finances.
They also have to deal with different government agencies for their licensing as well as the national and county governments.
Lack of compliance to these numerous requirements opens them up to harassment by authorities enforcing payment of levies and taxes. They are also a low hanging fruit for national and county government officials looking for bribes, especially in instances where they fail to comply with the licensing.
Another major hurdle that SMEs in the country face is difficulty in accessing credit. Banks have over the years deemed SMEs as risky borrowers due to factors such as size, lower earnings and growth prospects compared to larger enterprises and lack of physical collateral.