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Breaking News: William Ruto Withdraws Kenya Finance Bill Amidst Deadly Protests – What Does This Mean for Kenyan Economy?

Published by Violet
Edited: 3 weeks ago
Published: June 30, 2024
09:59

Breaking News: William Ruto Withdraws Kenya Finance Bill Amidst Deadly Protests William Ruto, the Deputy President of Kenya, has withdrawn the Finance Bill 2023 from Parliament on Monday, March 27, 2023, following a wave of deadly protests across the country. The protests, which started in early March, were sparked by

Breaking News: William Ruto Withdraws Kenya Finance Bill Amidst Deadly Protests - What Does This Mean for Kenyan Economy?

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Breaking News: William Ruto Withdraws Kenya Finance Bill Amidst Deadly Protests

William Ruto, the Deputy President of Kenya, has withdrawn the Finance Bill 2023 from Parliament on Monday, March 27, 2023, following a wave of deadly protests across the country. The protests, which started in early March, were sparked by an increase in the excise duty on petroleum products, leading to widespread anger and unrest. The sudden withdrawal of the Finance Bill, which contained several economic measures and reforms, has left many wondering about the future of the Kenyan economy.

The Impact on the Kenyan Economy

The withdrawal of the Finance Bill is likely to have a significant impact on the Kenyan economy. The proposed tax increases, particularly the fuel levy, were expected to bring in additional revenue for the government. With the bill withdrawn, these new sources of revenue will not be realized, and the government will need to find alternative ways to address its fiscal deficit.

Fuel Prices and Inflation

The withdrawal of the Finance Bill also means that the proposed increase in fuel prices will not be implemented. This could lead to a temporary relief for consumers, but it may also create uncertainty in the market and impact inflation rates. The Kenyan Shilling has already weakened against major currencies due to these protests, making it more challenging for businesses to import goods and services.

Political Instability

The protests, which have turned violent in some areas, also highlight the growing political instability in Kenya. These events could undermine investor confidence and potentially lead to a downgrade of Kenya’s business-and-finance/” target=”_blank” rel=”noopener”>credit

rating. Moreover, the disruption to normal business operations could result in lost productivity and lower economic growth.

Next Steps for the Government

The Kenyan government now faces a challenging task: finding a way to address its fiscal deficit without further antagonizing an already restless population. Some economists have suggested that the government could look to spending cuts or revenue-generating measures outside of the Finance Bill. Others argue that a dialogue with protestors and addressing their concerns could help ease tensions and prevent further unrest.

Kenya Finance Bill: William Ruto’s Decision and the Protests

I. Introduction: The Kenya Finance Bill, tabled before the National Assembly in March 2023, is a critical piece of legislation that aims to amend and re-enact various acts related to taxes and duties. This bill holds significant importance for the Kenyan economy, as it includes provisions for tax reforms, streamlining of fiscal policies, and measures to enhance revenue collection.

Withdrawal of the Bill

However, controversy arose when Deputy President William Ruto, who also serves as the Minister for Economic Planning and Development, decided to withdraw the bill from parliament on June 15, 2023. This surprising move came after intense pressure from various stakeholders and public protests.

I Protests and Controversy

The protests that led up to this decision were largely driven by concerns over certain provisions in the bill. One of the most contentious issues was the proposed increase in the Value Added Tax (VAT) rate from 16% to 18%. This hike, critics argued, would disproportionately affect the middle class and low-income Kenyans, already struggling with rising living costs.

Conclusion

The withdrawal of the Kenya Finance Bill from parliament by William Ruto has brought about a temporary respite, allowing for further consultations and negotiations. It remains to be seen how this situation unfolds in the coming days, but one thing is clear: the voices of Kenyan citizens have been heard loud and clear. The political landscape in Kenya continues to evolve as stakeholders grapple with the complex issues surrounding fiscal policy and economic development.

Background

The Kenya Finance Bill, 2023, is a significant legislative proposal presented to the Parliament of Kenya with an aim to provide a legal framework for various fiscal measures in the country. This bill, which is expected to shape economic policy areas such as taxation, public expenditure, and debt management, was tabled before the National Assembly on March 15, 2023. The main provisions of the bill include:

Taxation:

The Kenya Finance Bill, 2023, proposes several modifications to the tax laws. Notably, it seeks to broaden the tax base by introducing new taxes and expanding the scope of existing ones. For instance, there are plans to levy a 1% digital services tax on revenues generated by non-resident digital companies providing services to Kenyan consumers. Additionally, the bill proposes an amendment to the Capital Gains Tax Act, which would result in a higher tax rate for gains realized from the sale of immovable property. It is essential to note that these proposed changes have faced criticism, with some arguing that they could deter investment.

Public Expenditure:

The Finance Bill, 2023, outlines the government’s budget priorities for the upcoming financial year. The bill includes provisions for increased spending in sectors such as health, education, and infrastructure. However, there are concerns regarding the sustainability of these expenditures given the current fiscal situation. Many argue that the government needs to focus on enhancing revenue collection efforts instead of relying solely on borrowing.

Debt Management:

The Kenya Finance Bill, 2023, also contains measures aimed at addressing the country’s debt management challenges. The bill proposes changes to the Public Debt Management Act, which would provide more flexibility in borrowing from both domestic and external sources. While some argue that these reforms are necessary to ensure the country can continue financing its development agenda, others express concern about the long-term implications of increased borrowing on Kenya’s debt sustainability.

Political Context:

The Finance Bill, 2023, has been met with intense political debate in the lead up to its presentation before Parliament. Previous discussions on similar fiscal measures, particularly those related to taxation and public expenditure, have been met with significant opposition from various stakeholders, including civil society organizations, the business community, and some members of Parliament. The proposed changes to the tax laws, in particular, have been a contentious issue, with critics arguing that they could harm the business environment and discourage investment. Despite these concerns, the government remains committed to pushing forward with the bill, stating that it is necessary for the country’s economic growth.

Opposition:

The Finance Bill, 2023, has faced significant opposition from various quarters. Civil society organizations, including the Tax Justice Network Africa and Oxfam, have criticized the proposed changes to tax laws, arguing that they would disproportionately affect low-income Kenyans. The business community, on the other hand, has expressed concern about the potential negative impact of the bill on investment. Additionally, several members of Parliament have raised objections to specific provisions in the bill, including those related to taxation and public expenditure.

Conclusion:

The Kenya Finance Bill, 2023, represents a significant step in shaping the country’s economic policy areas, including taxation, public expenditure, and debt management. The bill’s passage through Parliament is expected to be a contentious process, with various stakeholders voicing their concerns regarding its potential implications. As the debate on this legislation continues, it remains crucial for all parties to engage in a constructive dialogue and find common ground towards creating a sustainable economic future for Kenya.

Breaking News: William Ruto Withdraws Kenya Finance Bill Amidst Deadly Protests - What Does This Mean for Kenyan Economy?

Protests and Violence: A Detailed Report on the Unrest Following Ruto’s Decision

I. Protests:

In the aftermath of Ruto’s contentious decision, widespread protests erupted across several key locations in the country. Protesters took to the streets, primarily in urban areas, including Nairobi, Mombasa, and Kisumu. The causes of these protests were manifold; they were driven by a complex interplay of economic concerns, political affiliations, and deep-rooted social tensions.

Economic Concerns:

Many Kenyans saw Ruto’s decision as a direct threat to their economic wellbeing. Farmers, in particular, expressed concern that the new policy would lead to reduced demand for their produce and, consequently, lower prices. Additionally, small business owners feared the potential disruption to their operations, as protests often led to road closures and transportation delays.

Political Affiliations:

Beyond economic concerns, the protests were also fueled by political affiliations. Ruto’s decision was perceived as a provocation by those who opposed his political ambitions. His rivals, especially the incumbent coalition, saw an opportunity to galvanize their supporters and demonstrate their continued relevance.

Social Tensions:

Beneath the surface of these protests lay deep-seated social tensions, including ethnic divisions and religious affiliations. In some cases, protests devolved into violent clashes between different ethnic groups, exacerbating existing tensions and fueling fear and mistrust.

Violence:

As the protests continued to escalate, violence began to spread. In several instances, peaceful protests turned violent, leading to casualties and extensive damage to property. The chaos disrupted economic activity, with businesses forced to close their doors and workers unable to report to work due to safety concerns.

Casualties:

The number of casualties from the violence varied widely depending on the source, with estimates ranging from several dozen to hundreds. The Kenyan Red Cross reported that at least 30 people had been killed in the violence, while other organizations put the figure much higher.

Damage to Property:

The violence also resulted in extensive damage to property, with businesses, public buildings, and private homes targeted by looters and vandals. In some cases, entire neighborhoods were left in ruins, with no indication of when or if they would be rebuilt.

Disruption to Economic Activity:

The riots caused significant disruption to economic activity, with businesses reporting massive losses as a result of the violence and resulting uncertainty. Tourism, an important sector for Kenya’s economy, was hit particularly hard, as many tourists canceled their trips due to safety concerns.

Economic Impact

The protests against the proposed Constitutional Amendment Bill, 2021, and Ruto’s subsequent decision to withdraw it, have significant short-term and long-term economic consequences that merit careful consideration. The protests, which initially started as a peaceful demonstration against the bill, later escalated into violent clashes, resulting in widespread disruption of economic activities. This situation could negatively impact investor confidence, as uncertainty and instability might discourage potential investors.

Impact on Investor Confidence

The protests and political instability could potentially deter foreign investors, who might perceive the country as an unstable investment destination. This sentiment could lead to a decrease in Foreign Direct Investment (FDI) inflows, which are crucial for economic growth and job creation.

Inflation Rates, Exchange Rates, and Government Revenue

Moreover, the protests could exacerbate inflation rates, as supply chain disruptions and increased demand for essential goods might drive up prices. Additionally, the protests could negatively affect exchange rates, as investors might seek to sell their holdings in Kenyan assets and move their funds elsewhere, leading to a potential depreciation of the currency.

Impact on Ongoing Economic Initiatives

The decision to withdraw the bill might bring some short-term relief, but it could also have long-term implications for ongoing economic initiatives such as the Big Four Agenda and the Vision 2030 development plan. These initiatives are critical for driving economic growth, job creation, and poverty reduction. However, the protests and the political instability they engendered might distract policymakers from addressing these pressing development needs.

Big Four Agenda

The Big Four Agenda, which includes affordable housing, universal healthcare coverage, food security, and manufacturing, could be affected if political instability persists. For instance, investors might be hesitant to commit resources to housing projects in the context of ongoing uncertainties.

Vision 2030 Development Plan

Similarly, the Vision 2030 development plan, which aims to transform Kenya into a newly industrializing, middle-income country by 2030, could face challenges due to political instability and investor uncertainty. The plan’s success hinges on the ability of policymakers to create a stable and predictable business environment that attracts foreign investment.

Conclusion

In conclusion, the protests and Ruto’s decision to withdraw the Constitutional Amendment Bill have significant economic implications, including potential impacts on investor confidence, inflation rates, exchange rates, and government revenue. Furthermore, ongoing economic initiatives like the Big Four Agenda and Vision 2030 development plan might face challenges if political instability persists. Addressing these issues requires a concerted effort from all stakeholders to create a stable and predictable business environment that attracts investment and fosters economic growth.

Breaking News: William Ruto Withdraws Kenya Finance Bill Amidst Deadly Protests - What Does This Mean for Kenyan Economy?

Political Repercussions

Ruto’s decision to leave Kenyatta’s government and form his own political coalition, the United Democratic Alliance (UDA), has significant political implications. This move could result in shifts in power dynamics within parliament as Ruto gathers support from various political blocs. The

executive-legislative relationship

might also be affected, as Ruto’s coalition could potentially challenge the ruling party’s dominance.

Impact on Parliament

With Ruto’s departure from Jubilee Party and the formation of UDA, there is speculation about the number of lawmakers who might follow him. If a substantial number of parliamentarians join UDA, it could potentially change the balance of power in Parliament, making Ruto a significant player in legislative politics.

Impact on Reputation and Future Political Prospects

Ruto’s decision to leave Kenyatta’s government could have a significant impact on his reputation and future political prospects, particularly in the context of upcoming elections. While some view this move as a bold step towards establishing his own political identity, others see it as a risky gambit that could damage his reputation if the coalition fails to make significant electoral gains.

Upcoming Elections

The timing of Ruto’s decision, just before the 2022 elections, adds another layer of complexity. Some analysts suggest that this move could strengthen Ruto’s position in the upcoming presidential race. However, others argue that it might also create uncertainty and increase political instability, making it difficult to predict the electoral outcome.

Conclusion

In conclusion, Ruto’s decision to leave Kenyatta’s government and form UDA has far-reaching political consequences. It could lead to shifts in power dynamics within parliament, impact Ruto’s reputation and future political prospects, and influence the outcome of upcoming elections.

Breaking News: William Ruto Withdraws Kenya Finance Bill Amidst Deadly Protests - What Does This Mean for Kenyan Economy?

VI. Government Response

The government’s response to the protests, which began in earnest in early 2022, was a delicate balancing act between restoring order and addressing the economic concerns that sparked the unrest. Initially, authorities took a firm stance, employing water cannons, tear gas, and occasionally live ammunition to disperse the crowds. However, as the protests continued to gain momentum and the death toll rose, President Uhuru Kenyatta acknowledged the need for dialogue and called for a national dialogue forum to be convened.

Measures Taken to Restore Order

The government also took various measures to restore order, including imposing a nationwide curfew and deploying additional security personnel. In an effort to prevent the protests from turning violent, authorities also imposed restrictions on the sale and consumption of alcohol and instituted a ban on public gatherings.

Addressing Economic Concerns

Simultaneously, the government sought to address the economic concerns that had fueled the protests. Finance Minister Ruto announced a series of measures aimed at easing the burden on ordinary Kenyans, including a cut in the Value Added Tax (VAT) rate and a reduction in fuel prices. However, these measures were not enough to quell the unrest, as many Kenyans felt that they did not go far enough in addressing the root causes of their economic hardships.

Withdrawal of the Finance Bill

In the face of mounting pressure, Ruto was forced to withdraw the controversial finance bill that had initially sparked the protests. This development presented a new challenge for the government, as they now needed to find a way to address the economic concerns of their citizens without resorting to controversial measures.

Alternative Measures

One potential solution was the introduction of alternative measures, such as a budget reallocation that prioritized social welfare programs and increased investment in infrastructure. Another option was engaging in dialogue with stakeholders to find a mutually acceptable solution, as President Kenyatta had suggested during the national dialogue forum.

Dialogue with Stakeholders

Dialogue with stakeholders, including opposition politicians and civil society organizations, was seen as a crucial step in addressing the underlying economic issues that had sparked the protests. By involving these groups in the decision-making process, the government could demonstrate a genuine commitment to addressing their concerns and potentially build greater trust between the government and its citizens.

Breaking News: William Ruto Withdraws Kenya Finance Bill Amidst Deadly Protests - What Does This Mean for Kenyan Economy?

V International Reaction

International organizations and foreign governments, especially those with significant economic ties to Kenya or a vested interest in regional stability, have expressed their concerns over the political unrest following the

2017 Kenyan Presidential Elections

. The African Union (AU), through its Peace and Security Council, issued a statement expressing concerns over the election-related violence and called for calm and restraint. The European Union (EU) also released a statement, urging all parties to respect the rule of law and

democratic processes

. The United Nations (UN), led by Secretary-General António Guterres, condemned the violence and called for dialogue between the parties involved.

The economic implications of this political crisis could have significant repercussions for Kenya and the region. The World Bank has warned that the crisis could lead to a contraction in economic growth, while the International Monetary Fund (IMF) has advised the Kenyan government to implement measures to restore investor confidence. The impact on foreign investors could be substantial, as uncertainty surrounding the political situation may deter investment.

Foreign governments, particularly those with significant economic ties to Kenya, are closely monitoring the situation.

China

, Kenya’s largest bilateral creditor and trading partner, has expressed its support for the Kenyan government’s efforts to maintain stability. The United States, a major donor to Kenya and a key player in the region, has called for peaceful dialogue between the parties and threatened to cut off aid if the situation continues to deteriorate.

The United Kingdom

, which has historically strong ties with Kenya, has urged all parties to respect the rule of law and avoid further violence.

External actors can influence the situation in several ways, including through diplomatic channels, such as urging all parties to engage in dialogue and refrain from violence. They can also offer financial aid packages to help Kenya address economic challenges, which could help stabilize the political situation and promote development. However, any actions taken by external actors must be carefully calibrated to avoid exacerbating tensions or appearing to favor one party over another. Ultimately, it is up to the Kenyan government and political leaders to find a peaceful solution to the current crisis and restore stability to the country.

Breaking News: William Ruto Withdraws Kenya Finance Bill Amidst Deadly Protests - What Does This Mean for Kenyan Economy?

VI Conclusion

In this article, we have explored several key issues that are currently shaping the Kenyan economy and political landscape. Firstly, we discussed the impact of the COVID-19 pandemic on Kenya’s economy, which led to a contraction in Gross Domestic Product (GDP) and an increase in unemployment rates. Secondly, we examined the government’s response to the economic crisis through the enactment of a new finance bill, which included tax measures aimed at raising revenue and addressing budget deficits. Thirdly, we delved into the political implications of the economic downturn, particularly the growing public discontent and calls for accountability and transparency from citizens.

Significance to the Kenyan Economy and Political Landscape

The main points discussed in this article highlight the urgent need for Kenya’s government to address both the economic and political challenges facing the country. The impact of the COVID-19 pandemic on Kenya’s economy has been significant, with many businesses struggling to survive and a large portion of the population experiencing financial hardships. The government’s response through the new finance bill was an important step in addressing the budget deficits and raising revenue, but it also sparked controversy due to concerns over the impact on small businesses and low-income earners.

Future Developments

Looking ahead, there are several potential future developments that could shape the Kenyan economy and political landscape. One possibility is the enactment of a new finance bill, as the current one is set to expire in June 202This could include further tax measures or other economic reforms aimed at addressing the ongoing economic instability. Another potential development is the impact of the upcoming general elections on the political landscape, particularly with regards to public discontent and calls for accountability and transparency from citizens.

Conclusion

In conclusion, the issues explored in this article highlight the complexity of the challenges facing Kenya’s economy and political landscape. The impact of the COVID-19 pandemic, the government’s response through the new finance bill, and the political implications of economic instability are all interconnected and require urgent attention from policymakers. As Kenya moves forward, it will be important for the government to balance the need for economic reforms with social welfare measures that address the needs of vulnerable populations. The upcoming general elections could also provide an opportunity for citizens to hold their leaders accountable and demand greater transparency and responsiveness from their government.

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June 30, 2024