This archive report was first published on 29 October 2019.
As the country teeters on the brink of economic decline, the International Monetary Fund (IMF) has issued a stark warning: Kenya's growth targets have been scaled down to 5.3 per cent from the previously predicted 5.6 per cent.
Published on October 29, 2019, the IMF's revised projections come as no surprise, given the country's recent struggles. Industries have been disrupted, with profits plummeting and severe job cuts on the rise.
Dozens of reputable firms have issued profit warnings, retrenching staff to contain costs and deepening the unemployment crisis. Some companies have even closed shop or relocated to neighboring countries, citing a hostile business environment.
The root cause of this economic downturn lies in the unfavourable business environment, which makes it difficult for companies to thrive. Tax collection has also proved challenging, with the Kenya Revenue Authority struggling to meet its revenue targets.
Acting National Treasury Cabinet Secretary Ukur Yattani has admitted that the targets imposed on KRA are unrealistic and untenable. The budget is always pegged on these revenue forecasts, and when they fail, the country finds itself in a precarious situation, unable to make ends meet.
Debt is piling up, and the situation is heading towards crisis levels. The agriculture sector, a bedrock of the economy, is also in decline. Production of major cash crops such as coffee, tea, and sugarcane is on the wane, and returns to farmers have fallen drastically.
Despite the worrying scenario, the government continues to engage in heavy spending, with resources being put into non-core expenditure like luxury cars, travel, seminars, and conferences that do not provide value to taxpayers.
Outright corruption, theft, and embezzlement of public funds are also rampant, with little being done to apprehend and punish the suspects. The government has been forced to slash budgets for all ministries and departments to mitigate against a cash crunch.
However, there is no evidence that this will contain spending. The government's continued engagement in wasteful ventures, such as hiring a private jet to fly President Uhuru Kenyatta to Japan and Russia for meetings, only exacerbates the problem.
The country is in crisis, and sound economic policies are needed to get out of the rut. Political leaders can no longer lie about the financial health of the country; it is struggling and must be fixed.
