President William Ruto has maintained that his government will not re-introduce subsidies on petroleum products and maize flour.
Defending his decision, Ruto says subsidies introduced by his predecessor Uhuru Kenyatta to cushion poor Kenyans were economically unsustainable and meant to benefit the well-connected business class, but not suffering Kenyans.
“We have saved our economy huge amounts of money by removing subsidies, we will not go back to subsidies,” Ruto said.
To offer a lasting solution, Ruto says, his government has instead introduced subsidised fertiliser for over four million farmers countywide to produce enough food that, he says, will finally bring down the cost of living.
“Our focus now is on promoting production,” he said.
Ruto’s stand comes days after the opposition leader, Raila Odinga, threatened nationwide protests in mid March over the high cost of electricity and key commodities like maize flour, which is used to prepare ugali (Kenya’s staple food).
The current price of 2kg of maize flour ranges between KSh109 ($.85) and KSh123, with fears that the price would rise to KSh200 if the government maintains its stand on subsidies. The opposition wants the price to come down to below KSh100.
Last week, police used teargas to disperse a group of protesters, led by comedian Eric Omondi, who had gathered outside parliament buildings in Nairobi to agitate against the skyrocketing cost of living.
The inflation rate is at 9%, largely due to an increase in prices of commodities like food, gas and fuel, according to a recent report on Consumer Price Indices and Inflation rates by the Kenya National Bureau of Statistics (KNBS) that was released in January.
Hustler fund not helping much
A few months into his presidency, Ruto launched his campaign flagship promise of the Hustler Fund, setting aside KSh50bn for the next five years, targeting 15 million Kenyans, particularly unemployed young people, to make them small business owners.
Ruto announced that in the last two months, 18 million people have borrowed KSh17bn, but 800,000 borrowers have defaulted on their loans.
Sammy Awusa, 27, a university graduate, is among the defaulters. He tells The Africa Report that he could only access KSh1,000, which he wanted to use to start poultry farming, but instead used the money to buy food.
“I had not eaten for two days, when I got the loan, I ended up buying two packets of maize flour,” he says.
Johnson Denge, an economic and political analyst in Nairobi, tells The Africa Report that with the current loan limits ranging from a minimum of KSh500 to a maximum of KSh50,000, borrowers are opting to use the money to solve their immediate challenges instead of investing.
“Though the idea of the fund is good, its effectiveness to improve people’s lives is yet to be felt, “ he says.
Denge says the Ruto administration should consider increasing the limit to encourage more borrowing, with an aim of creating a stable business.
“Kenyans want to have better investments to make their lives better, the amount borrowed is too little,” he says.
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