Understanding the economic foundations of ongoing protests in Kenya
Understanding the economic foundations of ongoing protests in Kenya
Popular discontent, intra-elite distributive politics, and possible ways forward
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I: The Kenyan experience of the global cost-of-living crisis
This past week Kenya witnessed some of the deadliest protests in years. Beginning in March, the leading coalition of opposition parties, Azimio la Umoja (Azimio), mobilized Kenyans to go to the streets, ostensibly to protest the cost of living crisis that is gripping the country. President William Ruto’s proposed tax measures in the 2023 Finance Bill added fuel to the protests. In line with historical patterns, the protests degenerated into running battles between police, protesters, and looters. Disproportionate use of force by the police has led to dozens of deaths. Police are reported to have killed at least 33 people in July alone.
There is no denying that Kenyan households face a severe cost-of-living crisis — much in line with global trends post-pandemic and Russia’s invasion of Ukraine. For example, the price of maize flour, a Kenyan staple, has gone from KES90 in 2018 to over KES200 today. What this means is that even middle-class families are struggling to stay on top of their monthly budgets.
The rise in prices has been exacerbated by a decade-long stagnation in real wages and new tax measures introduced by Ruto’s administration. The wage stagnation is a symptom of generalized private sector malaise since 2013. President Uhuru Kenyatta's (2013-2022) public works binge and runaway government borrowing (not to mention cartelization of key sectors of the economy) snuffed out the momentum that the private sector accumulated under President Mwai Kibaki (2003-2013). Credit to the private sector declined (since 2015), earnings petered out, and workers saw little growth in their wages.
Of course Ruto is not a rainmaker and couldn’t have done much about successive unseasonably dry planting seasons (only 2% of Kenyan crop fields are irrigated). Neither could he do much about supply shocks caused by COVID and the war in Europe. Furthermore, inflation rates in Kenya (7.9% in June) are at historical lows and not particularly off-trend relative to its neighbors (see figure).
That said, Ruto bears responsibility for failing to ameliorate the bite of the cost-of-living crisis. For example, at the moment (after the recent doubling of the VAT on fuel to 16% in his Finance Bill), about 48% of the price of petrol is composed of taxes and levies. The same goes for the cost of electricity, where policy-related charges comprise 43.1% of the cost of power — and are about to comprise an even bigger share. The rising cost of energy has had knock-on effects on all manner of essential goods and services — from transportation to flour to fast moving consumer goods.
Kenyans are also feeling Ruto’s aggressive approach to tax enforcement — necessitated by the fiscal hole he inherited from Kenyatta and conditionalities for accessing external credit markets. The top income tax rate is now 35%. A new housing levy will consume another 1.5% of gross wages (to be matched by employers). And the Kenya Revenue Authority has new powers to enforce all taxes in the books — a move that is contributing to a shortage of some imported consumer products. While these measures to buttress fiscal capacity are welcome in theory (Kenya collects less than 18% of GDP in taxes), the timing has had the net effect of reducing real household incomes at a most inopportune time.
According to polls the Finance Act (2023) is deeply unpopular, including in Ruto’s political strongholds. Two separate surveys have now shown that more than 70% of adults are opposed to the bill. It is no wonder that tens of thousands of people throughout the country heeded Azimio’s calls to protest for the last four months despite the heavy-handed police response.
Given the stakes, it would be a grave mistake to reduce the protests to Azimio’s oppositionist politics. The economic grievances expressed by protestors are real and, as several commentators have perceptively observed, if unaddressed will likely outpace the designs of Azimio’s leadership. A staggering 70% of adults think the country is headed in the wrong direction — with 75% opining that the president is to blame for poor economic conditions.
II: The other reasons why Kenyans are in the streets
Beyond the cost-of-living crisis, the protests are also a symptom of ongoing changes in the logics of Kenyan political economy — both in terms of intra-elite relations (including property rights) and perceptions of civic efficacy among the general public. How Ruto manages these changes will undoubtedly define his presidency.
It is common knowledge that Ruto was not the Kenyan establishment’s preferred choice for president in 2022. Partly because of his humble family roots, but also because of his own choices to not invest in the necessary social capital, he never joined the establishment club (despite his sizable wealth and political influence). Yet he won anyway, largely by championing populist policy positions against the “dynasties” (read Kenyattas, Mois, Odingas, and their economic allies) that had allegedly rigged the economy in their favor for decades. As I have argued elsewhere, Ruto’s campaign was the first in recent memory to make economic appeals front and center (as opposed to the usual ethnic census model of mobilizing voters). In this regard, the 2022 campaign season provided important opportunities for political education on economic policymaking — and raised citizens’ expectations and willingness to scrutinize the government’s economic policy.
An intra-elite struggle for economic and political power
The style with which he won the presidency has created two major problems for Ruto. First, the “dynasties” have shown that they will not retire into the sunset quietly — and will do a lot to protect their economic and political property rights. For example, upon retiring last year Kenyatta did not relinquish his post as leader of the former ruling party, Jubilee. Odinga remains very active within his own Orange Democratic Movement and the wider Azimio la Umoja One Kenya Alliance tent; and has been the key mobilizer for Maandamano (protests). There is evidence that Kenyatta, Odinga and their allies are determined to wrestle the wider Mt Kenya region from Ruto’s grip — even if it means forming an unholy alliance with a group like Mungiki.
With this in mind, it is not surprising that Ruto and key members of his administration see dynastic shadows everywhere — in the media, academia, mainline churches, big businesses, civil society, etc.
In reaction to his dynastic opponents, Ruto has shown that he is willing to break norms that have underpinned elite political stability in Kenya for decades — by going after personal property and family members of leading politicians. The police tried to raid the home of Kenyatta’s son for unspecified reasons, forcing the former president to intervene in desperation (and hold an unprecedented press event after). Earlier this year Ruto loyalists organized an invasion of Kenyatta’s private ranch by “protestors.” Ruto has personally accused firms owned by the Kenyattas of tax evasion. The Kenyatta’s dairy firm has been banned from importing milk from its operations in Uganda. And in a move that stunned many, the government withdrew official security for Kenyatta’s mother and former First Lady Mama Ngina.
Some of these breaches of long-held norms arise from the fact that Kenyatta has found himself on the losing side of a vicious intra-ethnic fight against his former aide, Deputy President Rigathi Gachagua. However, the buck stops with President Ruto. It is his administration, not Gachagua’s.
The Ruto administration’s anti-establishment drive extends well beyond the Kenyattas. Odinga’s East Africa Spectre Limited (a manufacturer of gas cylinders) was invaded this year. A Cabinet Secretary issued a barely concealed death threat against Odinga. Private firms owned by “apolitical” families have also faced policy pressure from the firebrand Cabinet Secretary (CS) in the Ministry of Investments, Trade, and Industry. The CS accused incumbent businesses opposed to his reforms of being part of cartels out to fleece consumers. President Ruto went further, accusing said businesses of tax evasion and being behind the cost-of-living protests:
“Even if they sponsor demonstrations so that they don’t pay tax, I want to promise them that they will pay tax. There are no more exemptions. This country is not an animal farm, where some are more equal than others.”
The full truth is a bit more complicated than Ruto claims. Reasonable people can agree that Kenyatta presided over an administration rife with crony capitalism and the worst forms of corruption; and that the Kenyan economy needs de-cartelization and just tax enforcement at all income levels. At the same time, it appears that Ruto and his allies are not interested in ridding the economy of the Kenyatta-era inefficiencies. To be blunt, they simply want to replace the establishment incumbents by levering public policy and raw state power.
A vivid example of this is MITI’s recent decision to flood the Kenyan market with subsidized imports of edible oils, instead of using subsidies in a manner that helps Kenyan firms. The idea appears to be to force incumbent pro-Kenyatta/Odinga firms into submission, or drive them aground through unfair competition.
Overall, Ruto’s approach to intra-elite political and economic competition has the ingredients of a political middle income trap, or worse. Unlike Kibaki and Kenyatta who leveraged policy to the benefit of emerging or established businesses, Ruto and his allies are trying to dislodge incumbents and offering little in support for new/different sectors as the basis for growing their economic power. This is a recipe for economic and political instability. If the last four months are any indication, the establishment elites are very much willing to leverage popular discontent to make Ruto’s life difficult. This should not come as a surprise. They have a lot to lose.
The class politics cat is out of the bag
Ruto’s troubles with the establishment have compounded his political woes vis-a-vis the general public. He campaigned in the poetry of anti-establishment class politics, but has so far governed in the prose of arriviste cronyism. Visible corruption at the highest levels of government have not gone down. Government is as inefficient as ever. Important public service sectors like healthcare and education are visibly crumbling. Yet taxes are up. To crown it all, the passage of the Finance Act (2023) betrayed an administration that is either out of touch or deeply contemptuous of public opinion.
Consequently, many Kenyans have found themselves wondering, if the establishment was/are the problem, why not do something about it? And where are the pro-poor policies (including tax cuts) that they were promised during the campaigns?
So far it appears that Ruto had underestimated the staying power of his mobilization of voters around economic issues. By assiduously downplaying ethnicity in his campaigns and attacking “dynasties” with populist messages, he appears to have convinced a large section of the public that economic concerns can be effectively litigated through politics and state institutions — and that incumbents can indeed use the levers of policy to make regular people’s lives better. This was a simple but important departure from “regular order” in which the public largely viewed public goods and services as favors from incumbents (or which one earned on account of their ethnic proximity to incumbents).
Under these conditions, the more Ruto fights the establishment elites the more salience he gives to his populist economic promises — and the more glaring the gaps between his promises and what he has actually delivered over the last year.
The net effect is that the threshold for getting people into the streets and against the government is currently very low. Unless cost-of-living pressures abate soon, and absent a change of strategy in recognition of Kenyan’s newfound political efficacy and salience of economic concerns above all else, he will undoubtedly continue to hemorrhage popular support. 61% of adults surveyed this month expressed support for the cost-of-living protests. The initial strategy of making the protests an ethnic Luo affair (Odinga’s co-ethnics) has spectacularly flopped. As Onyango-Obbo noted recently, “[t]he sale of the protests spoke of a national organizational capability that the [Azimio] coalition has rarely shown..” It’s the economy, not ethnicity, stupid.
III: Conclusion and way forward
In today’s Kenya, the old ways of doing politics (e.g. ethnicity and dynastic politics) are dying, but new logics of organizing politics are yet to congeal. Neither Ruto and his allies, nor his opponents appear to fully understand this reality, with both camps seemingly convinced that they can whip up public anger and effectively direct it at their enemies. This makes for a dangerous situation. The brinkmanship that Kenyans have witnessed over the last few months could have easily gotten out of hand and resulted in generalized political instability.
Moving forward, the only person with the ability to ensure that the ship of state moves in the right direction is President William Ruto. To add one more transportation analogy, the train full of the people and their economic dreams and grievances has long since left the station (and will keep moving forward with or without the president). In the same vein, the establishment elites will fight tooth and nail to protect their property rights and attendant privileges, including by leveraging popular economic grievances against Ruto’s administration. Ruto can choose to prosecute a highly-destabilizing naked war on the economic and political establishment, or adeptly leverage populist support for a gradualist and institutionalist reform agenda. Another option would be to simply collude with the establishment. From a normative standpoint, the first and third options are not ideal. The second option is ideal, but requires a lot of political patience, risk tolerance, and long-term thinking that I doubt Ruto and his allies are willing to countenance. They have an election to win in 2027.
If I were a gambling man, I would bet that Ruto will pursue a hybrid of the first and second options. His coalition allies, especially Kenyatta’s coethnics, are unlikely to sign off on collusion. The coalition’s new elites need to amass wealth fast which, in the current global economic environment, will mean less innovation or creation of new sectors and more cannibalization of existing businesses — not to mention a frenzied feeding at the trough of public procurement.
For the purposes of getting reelected, Ruto is likely to maintain the language and habits of populist retail politics. Whether or not the electoral motive will push him closer to the second option is hard to predict. So far he has given the impression of a politically-weak president at the mercy of his coalition allies and fearful of dynastic shadows — the deadly lashing out at protestors and return of extra-legal detentions witnessed this past week are a sign of weakness, not strength. Any chance of a reset will have to start with Ruto realizing that his power lies in the people, and not the wannabe-dynasts around him. Should he successfully find his populist footing, he might be in a position to set the agenda regarding intra-elite power politics, while also ensuring that voters stay onside through a prudent management of the economy and public affairs — that is, move closer to the normatively preferable second option.