There will be no immediate relief to the high cost of living, it appears, as the new administration refrained from giving a clear roadmap on its earlier promise of giving Kenyans relief within 100 days of getting in office.
President William Ruto instead laid out plans that will over time bring down the cost of essential commodities. These include increasing production of staples such as maize by offering farmers cheap fertiliser.
At the same time, however, he hinted at elimination of fuel and maize subsidies.
Dr Ruto, in a speech delivered after taking his oath Tuesday, September 13, noted that measures the government has so far put in place to cut cost of living, including the subsidies, have not worked.
He said his government would instead focus on such areas as food production through cheap inputs, including fertiliser, to bring down the cost of food.
The government, he said, will beginning next week, make available 1.4 million bags of cheap fertiliser at Sh3,500 down, from Sh6,500 for a 5kg bag, which will enable farmers take advantage of the short rains season.
“Our people are confronted daily with increasingly unaffordable prices, especially food and transport,” said Ruto, acknowledging the challenge of high cost of living but also explaining that the measures put in place have so far failed and proved too costly for the government.
“Interventions in place have not borne fruit. On the fuel subsidy alone, taxpayers have spent a whooping Sh144 billion, Sh60 billion in the last four months alone. If the subsidy continues to the end of the financial year, it will cost the taxpayer Sh280 billion, equivalent to the entire national government development budget.”
“Additionally, there was an attempt to subsidise unga in the run-up to the election, a programme that gobbled Sh7 billion in one month,” he said.
The president noted that subsidies had a way of working against the consumers, instead of benefiting them.
“In addition to being very costly, consumption subsidies interventions are prone to abuse, distort markets and create uncertainties, including artificial shortages of the very products they seek to subsidise,” he said.
Ruto said his administration would address the root cause of the high cost of living in the country, which he identified as high cost of production.
“Our strategy to bring down the cost of living is predicated on empowering producers,” he said, adding the decline in production of maize locally has been on account of high cost of inputs such as fertiliser and seeds.
Ruto also said the government has made arrangements with KTDA to supply tea farmers with fertiliser at Sh3,500, down from Sh5,600. The president campaigned heavily on his ability to revive economic growth, bring down the cost of living while creating an environment that will enable small businesses thrive.