Kenya 2022: Food and fuel inflation sparks Odinga-Ruto blame game

Since the beginning of the year, Robert Nyagah, a resident of Nairobi’s sprawling Eastleigh estate, has seen his expenditure on basic commodities increase sharply, gobbling a chunk of his meagre earnings.

The prices he pays have skyrocketed:

• a packet of milk that was retailing at KSh40 ($0.35) late last year now costs KSh70;
• a loaf of bread goes for KSh80, up from Sh50 ($0.43);
• A 10-litre jug of cooking oil that he used to buy for KSh1,450 now retails for KSh3,100;
• And the 6kg cooking gas tank that his wife uses for cooking costs Sh1,500, up from Sh800.

“I am really worried whether I will still be able to adequately feed my family let alone educate my children if the economic situation does not improve,” says the 40-year-old father of four children.

Prices of basic commodities are expected to continue rising after the government increased fuel prices following a biting shortage of the essential commodity that almost brought the country to a standstill.

“The recent increase in fuel prices will have a knock-on effect on the cost of essentials, meaning we will have to dig deeper into our empty pockets,” Nyagah tells The Africa Report.

Kenya’s food prices rising fast

According to the World Bank’s Africa’s Pulse report, Kenya has had some of the highest spikes in food prices in sub-Saharan Africa this year.

The report says the rate at which food prices in Kenya increased over one year was close to that of war ravaged countries on the continent.

“Food inflation in Kenya was at 8.69% in February compared to 6.9% in the same month in 2021,” says the bi-annual publication that reviews the continent’s economies.

The worsening situation is also reflected in a United Nations Sustainable Development Goals fact sheet survey released early this year. It shows the proportion of Kenyans living in poverty increased from 38.9% to 53% since 2013 when the Jubilee government took over.

“This means that more Kenyans are losing the ability to purchase essential commodities for survival,” says John Mutua, a programme coordinator at the Institute of Economic Affairs (IEA), an economic think tank.

Allegations of state capture

It is an election year, and accusations and counter accusations are common about who is responsible.

Deputy president William Ruto and his allies in the Kenya Kwanza alliance say the blame falls squarely on President Uhuru Kenyatta and his ally Raila Odinga.

During the United Democratic Alliance party’s national delegates conference held last month, Ruto tore into his boss, accusing him of ruining the economy and presiding over state capture.

“Our competitors are agents of monopolies. They are the masters of conflict of interest. They are agents of state capture, and we must free this country,” he said.

If elected president, Ruto said he will ensure the massive public debt weighing down on the economy is investigated.

“It is tragic that the only thing the [government has done is] borrow KSh7trn ($60.4bn) in four years,” added the deputy president.

What happened to the ‘big four’?

Kimani Ichungwa, a former chair of parliament’s budget committee, concurs, saying Kenyatta abandoned the ‘big four’ agenda (food security, affordable housing, universal healthcare and manufacturing and job creation) that the Jubilee government was to focus on in its second term. He says that instead it wasted the country’s time and resources on the controversial Building Bridges Initiative that the supreme court declared illegal.

“We abandoned the ‘big four’ agenda […] and now Kenyans are suffering and cannot even put food on the table,” says Ichungwa, a Ruto ally.

Ichungwa also accuses Kenyatta of getting his priorities wrong by concentrating on ‘phantom projects’ to secure his legacy at a time when the country’s economy experiencing problems.

The problematic irrigation scheme

However, allies of Kenyatta and Odinga say Ruto is trying to run away from problems that he helped cause.

“The reason why Kenyans are hungry today is because some people in the Jubilee government after winning the 2013 general election went on a borrowing spree and misappropriated funds, including money which was supposed to irrigate the country and construct dams,” says Orange Democratic Movement (ODM) party chairman John Mbadi.

Mbadi is referring to the failed KSh7.2bn Galana-Kulalu irrigation scheme, one of Uhuru and Ruto’s flagship food security projects in Tana River and Kilifi counties, which was marred by mismanagement and allegations of corruption.

Odinga’s and Kenyatta’s allies also point out that Ruto backed two dams, Arror and Kimwarer in his Rift Valley backyard, whose viability both financially and technically were in question.

A review by a technical committee found that the treasury paid KSh19.8bn fraudulently for the dams and borrowed an additional KSh4.6bn to pay interest, contrary to the exiting financial rules and regulations.

Appetite for borrowing

Mbadi, the ODM chairman, also says Ruto has to accept that he is part of an administration that borrowed money at interest rates as high as 7% from Chinese banks only to use them on populist programmes.

“They [top Jubilee administration officials] borrowed money at high interest rates to give Anne Waiguru [the then devolution cabinet secretary] to clean Kibera slum, an exercise that was not adding value to the economy. Now we are paying the price for their mistakes,” says Mbadi.

Economists warn of tough times ahead, saying the price of goods and services like food, housing, transportation, fuel and energy – which are normally used to measure the cost of living – are likely to continue increasing.

The inflation rate, which currently stands at 5.8%, many economists argue, also does not accurately reflect experiences on the ground.

Who is to blame?

Politics aside, why is the country facing tough economic times and who should bear the blame?

According to Kwame Owino, the chief executive officer of the IEA, the rising cost of living can be attributed to local and global challenges.

“The high global energy prices and weakening of the Kenyan shilling against international currencies have certainly contributed to the high cost of living. Fuel is imported and paid for in dollars, meaning that the consumer will have to bear the extra cost,” says Owino.

Secondly, Kenya imports more than it exports. The country, for example, does not produce enough of its staple foods – namely maize, wheat and rice – so it imports grain.

Some of the problems are of the country’s own making. The Jubilee administration’s appetite for populist projects saw the country’s debt increase from KSh1.8trn in 2013 to 8.2trn currently.

In fact, 60% of the revenue collected by the government goes to servicing debts, a situation that is risky during weak economic growth.

The problem is compounded by the uncertainties surrounding the forthcoming general elections. Many investors are adopting a wait-and-see attitude.

Owino says though a lot of blame is placed on the executive, the damage that happened to the economy in the past seven years would not have been possible without parliament’s approval. “Every year the government tells us we are going to tighten our belts but we see the expenditure increasing at a faster rate than inflation. The credibility of government and parliament is in question.”