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Impunity and indebtedness fuel fiscal crisis

By Irungu Houghtonn | Oct 20th 2018 | 3 min read

Safaricom’s data and call price hikes announcement fuels anxiety at the rising cost of living after new taxes last month. As Government rams deeper into our pockets, we face a period of austerity in our homes, county and national economies. Our lifestyles are not the problem, the problem is we have allowed others to budget for us.

A battery of public taxes and levies have driven up the costs of essential commodities and services by between 10 and 15 per cent. The cost of living may have gone up by 50 per cent from last year. Fuel, electricity, telephone and Internet data, banking and money transfers and foodstuffs are spiking all around us. While this affects us all, it will have a distinct impact on poor families, the gap between the rich and poor will widen and the Bill of Rights could be placed on hold.

The impact of household budget cuts, job redundancies, out of school and under-fed children and unmanageable health bills is showing up in our homes, extended families and given that we all live 5km from an informal settlement, in all our neighbourhoods. Most of us are now going into lifestyle adjustment mode. Lifestyle adjustments might make minor financial sense, but in this period of austerity, it is like opening an umbrella in a torrential rain storm.

Our lifestyles have not caused the current rain storm. Nor have the costs of devolution and political representation, heavy as they are. Impunity and indebtedness is at the centre of the current financial crisis. The lavish salaries and benefits of elected leaders cost tax-payers just under Sh24 billion annually. This is 1 per cent of the yearly Budget. Compare this against 30 per cent of the Budget that is estimated to be routinely stolen and stuffed into mattresses, magunia (sacks), banks and tax havens all over the world and we can see where the real gap is.

Before the Jubilee administration came to power in March 2013, there were 3,355 corruption cases. In 2018, this figure has swollen to 8,044. Many of these economic crimes are responsible for the Sh5 trillion in illicit and untaxed income that is currently sitting in bank accounts outside the country.

This year, the Government plans to take 45 per cent of the Budget, or Sh658 billion, and pay back domestic and foreign creditors such as the Chinese, the World Bank International Development Association and several European creditors. At current trends, the national debt will expand from Sh5.1 to 5.6 trillion by next year. Unless this is interrupted, alongside the instruments of power President Kenyatta will hand over to his successor in 2022, there will be a demand letter of Sh7.1 trillion tucked firmly in front of Article 1.

The primary reason for the existence of national and county governments is to realise the fundamental rights and freedoms spelt out in the Constitution. They are also obligated to manage public finance and the economy in a transparent and accountable manner. As citizens, we need to ask how we let our Government deviate from this purpose and what we need to do next. Only a fraction of us have taken any interest in county and national Budget-making and oversight processes. We have left the whistle-blowing to the Auditor-General and the National Integrity Alliance and the demonstrations to movements such as #StopTheThieves. When the Motorist Association of Kenya told us to park our cars in non-violent protest, we chose to drive in earlier. Too busy chasing the shilling, that shilling has proved to be costly to us all.

Budget cuts and tax hikes that undermine political, social or economic rights directly violate the Constitution. For Kenyans to be truly free from fear and want, it will take more than we have done to date. Our businesses will have to size up to the crisis. Smaller “kadogo” products such as “coke mwala” and others will not fix this. Our Government will have to aggressively pursue and recover corruption proceeds, freeze borrowing and start doing human rights assessments of the future impact of reforms. None of this requires a referendum or am I missing something important?

-The writer is Amnesty International Executive Director. Twitter: @irunguhoughton

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