2023 reflections and the factors that will shape the Socio-economic environment in 2024

A supermarket attendant helps a customer purchase cooking oil. [Denis Kibuchi, Standard]

This is the 52nd article of the year for this column and would be the last in 2023 as the year comes to a close.

Looking back, it is only fair that I pay my debt of gratitude, first to the almighty God for the inspirational run throughout the year and secondly, to our faithful audience that has in many ways kept us on our toes to sustain the momentum thus far.

Today, we take a tour back into the primary issue that has shaped the year and meditate on the things that may shape our socio-economic wellbeing in the year ahead. In line with the spirit of this column, the cost of living sums up everything as it relates to the welfare of the people.

Missed opportunity

At this point, it is analytically safe to state that the Kenya Kwanza leadership hasn’t lived up to their promises and expectations in handling of the economy. With President Ruto taking over the reins of power after what experts and the general public mood consider to be a disastrous 10-year reign of Jubilee, the expectations were very high. Going against strong political  waves, the hustler narrative seemed to resonate well with the populace. The promises were many with the right signaling to issues that mattered most to the electorates both at the time and to date.

This year offered the most opportune moment for the KK administration to translate their promises into reality or at least build a convincing case that they are steering the country in the right direction. Unfortunately for the hustlers and the business community, the year leaves them disillusioned by the turn of events.

Nothing proves this point more than the controversial food handouts offered this past week to a few folks in the home villages of the two most powerful men in the land in the name of sharing the Christmas love.

While we may have divergent opinions on the matter based on our socio-cultural persuasions, there is something fundamentally wrong with a leadership where a Head of State, his deputy and top officials cannot see the irony of this behaviour, more so within their backyards. It inadvertently affirms their leadership failure. It might have been a fashionable brand of politics in the years gone by, but not anymore.

For instance, the 2019 Census places the number of households at 12.2 million, scattered across 1,450 wards and about 7,000 sub-locations. What happens to the rest of the villages? Do we mean to say they are children of a lesser God? More troubling, who financed such foodstuff? Arguably, these leaders are men of means by their own rights, but it is common knowledge that public spending around the presidency in this country is treated as saintly, never to be questioned by the rest of us, mere mortals.

Doesn’t this open the possibility that these goodies were financed with taxes? In any case, where is the dignity of the beneficiaries when they are paraded all over social media? Did they consent? Isn’t this within the purview of the data protection laws, rights to privacy and against indignity? For now, the jury still remains out there.

Let’s now turn into the year ahead.

What will shape 2024?

From this column, there would be about seven factors that will play a pivotal role next year.

One is the thorny issue of the cost of living. The driving forces of expenditure at the household level remains intact as we roll over into the new year. These include the cost of fuel, basic utilities and cost of credit. While we may expect some temporary relief with bumper harvest from the short rains, the post-harvest food mismanagement is a key driver of food insecurity in the country. Tragically, there exist no policy structures to support farmers. After harvest, they are left at the mercy of brokers and powerful cartels with patronage in high places in government.

Housing Levy

Second is the controversial Housing Levy. Ruling by Justice David Majanja’s Bench that this levy is both discriminatory and unconstitutional has set this agenda as a priority. The government-sponsored Bill in Parliament to regularise the fund is likely to raise temperatures in the early days of the year. While the President seems keen to fight for the levy, it hugely remains unpopular with the employed folks. Nothing demonstrates how emotive the issue is turning out to be than the obviously stage-managed picketing by supposed hustlers in the capital on Thursday.

Then there is the interest rates that drive the cost of credit. The Treasury bill rates in the last auction of the year were 15.98 per cent, 15.96 per cent and 16.1 per cent for the 91-day, 182-day and 364-day bills respectively.

The Central Bank set the base rate at 12.5 per cent late last month with all commercial banks set to adjust their lending rates effective from January. This sets the cost of credit for 2024 to rates last witnessed over a decade ago. The net implication is a high cost of credit for both households and businesses, draining further any little left disposable incomes. It would be within reason to anticipate increased default rates and foreclosures throughout in 2024.

Fourth is the public debt question. With Ethiopia, our neighbour to the north, defaulting on their sovereign debt this week to join the ranks of Ghana and Zambia in the continent, the country’s debt sustainability is likely going to remain a hot issue.

While the President had proudly declared the nation will repay about $300 million of the $2 billion due in June 2024 this December, the Treasury only confirmed payment of the interest due and was silent on the principal redemption.

This has heightened speculation as to the official position on the matter. It would be advisable for the political leaders to keep off politicking on the subject and let competent professionals manage the delicate transition into debt stability and sustainability.

Health insurance

Fifth is on the proposed health insurance levy. This is likely going to raid the pockets of employees and employers, further complicating business operating costs and household incomes. While the idea maybe noble, there is no guarantee that the resources would be in safe hands to achieve the intended objectives.

The clarity on amounts to be levied remain ambiguous and accountability frameworks unclear. Lets face it, the anti-corruption crusade by the KK administration is more of a charade than a genuine desire to bring the vice into a crushing end. But time will tell on this.

Sixth is on the exchange rates and the attendant consequences. The shilling is more likely going to head south unless there is an official decisive intervention to remedy the situation. The oil G-to-G deal has proved inconsequential with no supporting export driven dollar inflows to balance imports demand for the greenback. The policy stance on a market determined exchange rate is at best a fallacy within our current context.

Finally, the role of the Church in shaping official policy and politics in the country. While the KK duo have branded themselves as the godliest lot of all successive administrations, the bubble is bursting faster than expected. The voice of the Church on pertinent economic and political questions is crystalising pretty fast. It will be interesting to watch how this pans out.

As I conclude, allow me to wish our faithful audience a blessed New Year. Keep it here in 2024 for another exciting 52 Saturdays, inshallah.