The generation of Kenyans born between 1997 and 2012 — the so-called Generation Z — have borne the brunt of the country’s slow economic growth. When a country experiences slow economic growth, it typically experiences higher unemployment rates, lower income levels and lower investment. This leads to an overall lower standard of living.
Over the past 10 years, between 2013 and 2023, Kenya’s average growth rate has been 4.5 per cent. This is less than half of the 10 per cent growth rate set by President Mwai Kibaki’s government in Vision 2030.
The goal of the national development plan was to transform Kenya into a middle-income country with a high quality of life for all its citizens by year 2030. But Kenya is still a long way off.
I have studied several aspects of the Kenyan economy over the past decade and would like to shed some light on the economic roots of the protests.
The finance bill, which proposed several tax increases, was the catalyst for the protests, but the anger had been building for years, since independence, when some of the pressing national problems were not adequately addressed. These include population growth, land degradation, corruption, and the dominance of politics over the economy.
The fact that 80 per cent of Kenya’s population is below 35 years old demands that the government urgently adopts new and innovative approaches to creating economic opportunities.
Perfect storm
Several economic factors have come together to create the perfect storm for these mass protests.
First, young Kenyans have endured tough economic times brought on by Covid-19 and the war in Ukraine.
Tensions were already evident in the run-up to Kenya’s 2022 presidential elections, with complaints about rising national debt and the cost of living.
At the time, President William Ruto’s alliance read the signs correctly and tapped into the discontent. As a presidential candidate, Mr Ruto promised to lower the cost of living if he won the elections. He also promised the better jobs to the downtrodden, popularly known as “hustlers”. And they voted for him in droves.
But two years into his administration, the economy was not growing as fact expected. And the patience of the hustlers ran out.
They have seen no transformation in their economic lives. This is despite the economy achieving a growth rate of 4.9 per cent in 2022, rising to 5.6 per cent in 2023. This growth was not enough to deal with the economic backlog. As a result, because I am an economist, I am usually asked: if the economy is growing, where is the money?
The second factor is the large number of frustrated, educated young people in the country.
Mr Kibaki’s government offered free education and 100 per cent transition from primary to high school. This not only raised literacy levels but also expectations.
But Kenya’s failure to create adequate opportunities for its educated young people has come back to haunt its political leaders. Those young people are at the forefront of the protests.
Generation Z is more educated than their parents. They have degrees, diplomas, and access to more information through the internet. They are also more cosmopolitan and less tied to tribes or political parties. That makes them easy to mobilise.
Despite their education, many are unemployed. Economic growth hasn’t kept pace with population growth, or even exceeded it, so job opportunities in the formal economy have been limited. The alternative has been the informal sector, which accounts for more than 80 per cent of the jobs. Such jobs offer low pay, low prestige, and no security.
Third, young people have contrasted their miserable lives with those of political leaders who flaunt their wealth. Conspicuous displays of wealth, from cars to watches, have angered Kenyans, especially as many struggle to make ends meet.
Fourth is corruption, a perennial problem that has become a major source of anger. Gen-Zs feel that corruption has stolen their future. They see it everywhere, from the street to offices. The word “tenderpreneur” has become a household word in Kenya. Tenderpreneurs make money by fraudulently winning government tenders and inflating the prices.
Fifth, they have more economically sophisticated needs – shaped by what their parents provided for them and what they have seen others have.
Bad to worse
The last straw, and the catalyst for action, was the 2024 finance bill.
It sought to broaden the tax base so that more Kenyans paid taxes. Gen-Zs saw the bill as adding to their economic woes and those of their parents, already burdened by the high cost of living as prices rise. Many wonder where the tax money goes. Many feel it’s either stolen or misused. The bill proposed a raft of taxes that citizens felt would further increase the cost of living.
Reports of firms closing down in Kenya, resulting in job losses, ostensibly due to taxes, may have added to the anger. With high expectations based on their level of education, Gen-Z saw their employment opportunities narrowing.
In addition, the young and well-educated Kenyans who sought to make a living in the informal economy – which accounts for 35 per cent of GDP – would have been caught in this widened tax net. The government’s requirement that taxpayers use technology to track their sales did not go down well with small business owners.
Add to this the Kenya Revenue Authority’s proposal to spy on financial transactions. Young Kenyans are the most prolific users of mobile money and digital services, even in the informal sector. Hence, they asked why taxes on digital services should be raised on “their home”.
Another source of anger is the widespread belief that the International Monetary Fund and the World Bank are calling the shots in Kenya, making economic decisions for the country and undermining its sovereignty and independence.
Where do we go from here?
The withdrawal of the finance bill will not end the anger. Economic transformation takes time. The government has not convinced Kenyans of this.
The government should focus on low-hanging fruit like revising Vision 2030 with input from the youth. It could also set a higher goal similar to Vision 2030. What is the Kenyan dream? Can it be articulated?
Gen-Zs learn from others. Can Kenya learn from others, like the New Deal that helped the US deal with the aftermath of the Great Depression?
Most jobs are created by the private sector. What incentives are there for this sector, which feels overtaxed? How attractive is the country to investors, both local and foreign?
Can the current government learn from Mr Kibaki’s government? How did he increase taxes without protests? Was it because he was able to show where and how the taxes were being used?
There’s also a need to improve communication so that citizens fully understand the reality of the situation regarding taxes and the country’s debt situation.
XN Iraki, Professor, Faculty of Business and Management Sciences, University of Nairobi
This article is republished from The Conversation under a Creative Commons licence. Read the original article.
