If you have been following recent news, you might have seen the massive protests sweeping across Kenya. Thousands of Kenyans are protesting against a proposed finance bill that introduces new taxes. The Finance Bill 2024, introduced in May, is a new bill that seeks to increase levies on a broad range of goods and services. However, the bill sparked widespread discontent among a population already struggling with high living costs. The government then agreed to remove some of these taxes, including those on bread, cars, cooking oil, and sanitary towels. However, protesters, largely made up of Kenyan youth, still flooded the streets of Kenya, saying the government’s removal of some taxes does not go far enough, and demanding the entire bill be scrapped.

What is the Kenyan Finance Bill?

The Finance Bill 2024 is part of Kenya’s 2024/25 budget plan and suggests tax hikes on various products and services to boost government revenue. Key provisions include a 16% VAT on bread, increased taxes on mobile money transfers, and a new annual 2.5% tax on cars. The bill also proposes an eco-tax on environmentally harmful products like packaging, plastics, and tires, raising the cost of items such as nappies, sanitary towels, computers, and mobile phones. Other proposed taxes include a 16% VAT on certain financial services and foreign exchange transactions. Income from digital marketplaces and digital content will also be taxed. President William Ruto has stated that these measures, expected to generate $2.7 billion in additional taxes, aim to reduce Kenya’s dependence on borrowing to fund its budget.

For a while, Kenya’s government has been facing a financial crisis. According to the IMF, Kenya owed at least $6.7 billion to China by the end of 2022. It owes $7.1 billion to bondholders, $3.8 billion to industrialized countries, $3.5 billion to the African Development Bank, and $1.9 billion to international commercial banks. According to the Parliamentary Budget Office (PBO), Kenya’s economy is still in danger of a liquidity crisis with its key debt sustainability indicators, including debt service-to-revenue ratio and debt-to-gross domestic product (GDP) ratio headed south. Hence last week, the Kenyan Parliament passed the Finance Bill 2024 in its second reading by a vote of 204 to 115. This development meant the bill would proceed to the committee stage, followed by a third reading, before making a last stop to the president for assent.

Why Are Kenyans Protesting?

For many Kenyans, the finance bill is the tipping point. Kenyans, are currently burdened by high living costs. Since President Ruto took office in 2022, the country has seen multiple tax increases on salaries and fuel. Last year, we reported how most county government employees and some civil servants including ministers, legislators, and civil servants, had not been paid since January. Last year, Kenya’s public debt increased by 70.8% of its GDP. Amidst these, the government introduced a 1.5% housing levy to fund affordable housing and a higher health insurance tax set to begin in July.

Following the bill reading, citizens have voiced their opposition online and organized nationwide protests using hashtags like #RejectFinanceBill2024, #OccupyParliament, and #TotalShutdownKenya on social media platforms such as TikTok and X. An online petition on Change.org has garnered over 111,000 signatures since June 15. Thousands have marched in coordinated protests across the country, including in Nairobi, where riot police have deployed tear gas and water cannons to disperse crowds. The protests are ongoing, with more planned as part of a series dubbed “7 Days Of Rage!” running from June 21-27. The bill has also drawn criticism from civil society groups like the Law Society of Kenya and private business owners who warn it could negatively impact sectors including retail, finance, internet services, transport, and manufacturing.

What is the Kenyan Government doing about the Protests?

Kenya’s security forces have faced accusations of excessive force from rights groups, with reports of one person killed and at least 200 injured. Hundreds of protesters have been arrested. President Ruto has also offered to hold talks with the young protesters. “I am very proud of our young people. They have stepped forward tribeless and peacefully to engage in the affairs of their country,” Ruto said. “They have done a democratic duty to stand and be recognized, and I want to assure them that we will engage in conversations to identify and address their issues.”

The intense public outcry has led the government to backtrack on some of its proposed taxes, including those on bread, motor vehicles, vegetable oil, sugar transportation, and financial services. The proposed eco-levy on locally manufactured products, including sanitary towels, diapers, phones, computers, tires, and motorcycles, will also be dropped. Additionally, there will be no increases in taxes on mobile money transfer fees and internet data charges.

Despite the government’s concessions, protesters remain dissatisfied, insisting that the remaining tax hikes and the overall bill be completely repealed. In his recent statements, President Ruto acknowledged the widespread dissatisfaction caused by the bill and appears to have conceded to the public’s demands. The president has reportedly stated that he will not sign a controversial finance bill. “Having reflected on the continuing conversation regarding the content of the Finance Bill 2024, and listening keenly to the people of Kenya who have said loudly that they want nothing to do with this Finance Bill 2024, I concede, and therefore I will not sign the 2024 finance bill,” Ruto said during a television address Wednesday.

 

 

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