Kenya: Can Ruto turn around the economy in 100 days?

In July while on a campaign trail  in the Mount Kenya region Deputy President William Ruto promised to bring down the cost of living in his first 100 days in office.

“The challenge of high cost of living can be dealt with by investing in agriculture, period,” Ruto said, dismissing the impact of the situation in Ukraine as a “tall tale”. “I will lower the cost of living in the first 100 days after taking office,” he said.

On September 5 after the Supreme Court upheld his win, many of his jubilant supporters and those of opponent Raila Odinga reminded him of the promise he made in Tharaka Nithi county.

“I want the President-elect to keep his promise of lowering the cost of living within 100 days. We will be waiting,” said John Gichinga from Nyeri county.

Hundreds of kilometres away in Siaya county a disappointed Collins Owino who voted for Raila also shared the same sentiments.

“I did not vote for Ruto but he is now our next president. His top assignment should be lowering the cost of living. We will hold him to his word,” Owino noted.

Though the deputy  president – who was following the proceedings with his close allies at his home in Nairobi’s Karen estate – had his eyes filled with tears of joy after the apex court dismissed Raila’s petition, he is well aware of the hellish job awaiting him.

Harsh economic realities

After his swearing-in as Kenya’s fifth president on Tuesday 13 September, the good mood will give way to the harsh economic realities which need urgent attention.

“Ruto’s political honeymoon will definitely be short-lived. He will have an overflowing in-tray of issues to attend to, the main one being the high cost of living,” says Githinji Kariuki, a tax expert.

The inflation rate which stands at 8.5%, the highest in five years, is a pointer to the worsening cost of living as prices of basic commodities continue to skyrocket.

According to the latest Kenya National Bureau of Statistics (KNBS) report, August was one of the most  difficult months in a decade as house rent, cost of food, water, electricity, gas and other household commodities rose by over 30% compared with last year.

The price of maize flour for example increased by 38% in August compared with the same month last year, maize by 36%, soap by 36%, kerosene by 30%, sugar by 23% and rice by 16.5%.

Lowering cost of living

A source with knowledge of the discussions taking place in the inner circle of the Kenya Kwanza coalition says bringing down the cost of living will be top on Ruto’s agenda once he assumes office. 

“The President-elect is fully aware that a majority of Kenyans are suffering hence bringing down the cost of living will be given priority,” says the source who did not want to be named because he is not authorised to speak to the press.

He adds that the Kenya Kwanza government will review the budget to ensure critical programs that have a direct impact on the cost of living under the ministries of agriculture, energy, water and irrigation and manufacturing among others have adequate funds.

“This means that some costly projects might be put on hold or have funding reduced to enable the government to deal with the high cost of living. The President-elect will also be very strict on government expenditure and will not entertain any wastage of public funds,” the source said, adding that Ruto will expound more on how he will tackle the cost of living crisis at the swearing-in ceremony.

During the campaign period Ruto placed the blame on President Uhuru Kenyatta and Raila, however, after taking the reins of power on Tuesday the task of sorting out the problem will rest on his administration.

“He will have to move quickly to appease his voting block, mainly the poor who are getting concerned about the rising cost of living. It will be a huge task and I do not believe it can be accomplished within 100 days,” says Kariuki.

Poor rainfall 

To make matters worse, the  weathermen have predicted that the country will receive poor rains in distribution and amount during the short rains period that runs from September to December.

“We will receive depressed rainfall even in our agricultural areas and that is not good news given that we are already experiencing prolonged drought,” says Dr David Gikunju, the managing director of the Kenya Meteorological Services.

Meteorologist Jane Reuben concurs saying the poor rains will negatively affect the agricultural sector – the backbone of the country’s economy.

“There will definitely be a decline in crop, livestock and fish production. There will be less feed for our animals and inadequate water for our crops,” says Reuben.

The Deputy President-elect Rigathi Gachagua warns that the incoming administration is inheriting a ‘dilapidated country’ which will require tough decisions to be made to put it on the right track.

“We are inheriting a run-down country, it will not be easy to sort out the mess,” Gachagua adds.

Plans to end fuel subsidy

In fact Ruto is taking over leadership at a time when the treasury plans to end the fuel subsidy scheme next month. It was one of the conditions imposed by the International Monetary Fund (IMF) for Kenya to access  emergency loans following the economic downturn precipitated by the covid-19 pandemic that saw thousands lose their jobs as the economy plunged into recession.

‘Once the fuel subsidy is eliminated Kenyans should expect an overall increase in prices of basic commodities since the cost of fuel normally has a knock-on effect. This will not go down well with many Kenyans,” warns Kariuki.

The country’s tax collector, the Kenya Revenue Authority (KRA),  has also proposed a 6.3% excise duty adjustment on products including fuel,  motorcycles, alcohol and SIM cards to align it with the inflationary trends witnessed last year. 

If accepted, the proposal will add an extra burden on the taxpayer who is already struggling to make ends meet.

Political analyst John Charo says  Ruto made ambitious promises which he will be expected to implement adding that he  will no longer have the luxury of making excuses if things go wrong.

“Some of the promises the deputy president made like increasing salaries for security officers and  expanding the school feeding programme will require a supplementary budget to implement since they were not factored in the 2022/2023 financial year,” observes Charo.

Increasing public debt

However the country’s bulging public debt which is inching closer to the KSh9trn mark ($74.8bn) will make it harder  for the new administration to implement its ambitious promises as it risks driving the country into further debt distress.  By the end of May, for example,  the country owed China a staggering Sh796.5bn ($6.62bn) amounting to 18.5% of the external debt load of KSh4.29trn ($35.6bn). This excludes the billions of shillings owed to local banks arising from increased domestic borrowing.

Charo adds that the President-elect will need a strong cabinet and unequivocal support in parliament to push his economic agenda, failure to which things might end up being messy before his five-year term comes to an end.

In 2013 after winning the elections with Kenyatta, Ruto  was accused of filling the cabinet slots allocated to his United Republican Party (URP) with his Kalenjin tribesmen, an assertion he vehemently denied arguing that he was not the appointing authority.

“This time round he must ensure that the cabinet appointments reflect the face of Kenya or else he will have difficulty uniting the country after the fiercely contested  presidential elections,” notes Charo.

New cabinet members

Expected members of the new cabinet are Musalia Mudavadi, the Amani National Congress party leader who made a pre-election pact with Ruto to be the chief cabinet secretary and lawyer Kindiki Kithure, who missed out on running mate position despite being the preferred choice of majority of the Kenya Kwanza Alliance members. Others are former National Assembly speaker Justin Muturi, former Turkana governor Josephat Nanok, former Kwale governor Salim Mvurya and the chief executive of Ruto’s presidential campaign Davis Chirchir.

However, the source maintains that Ruto will look at other critical qualifications, adding that being a member of the alliance will not automatically guarantee one a cabinet slot.

“The President-elect will also look at one’s profession, experience and integrity in choosing his cabinet because he needs a team that can deliver.”