The Kenya Kwanza Alliance has listed the Ukrainian war, global inflation and high-interest rates sparked by COVID-19-related global supply chain bottles as the precursor for the country’s high cost of living.
These are among three factors the alliance is blaming for the spiralling food prices and high cost of living.
The Ruto-led alliance claims in its manifesto that the nation is experiencing a “perfect economic storm,” which it attributes to both internal and external forces.
Globally, the alliance argues that the conflict in Ukraine and the overall impact of the COVID 19 pandemic are to blame for the rise in prices and shortage of essential commodities like fertilizer, edible oils, and petroleum, which are important economic drivers and key factors influencing the prices of basic commodities.
Investors are reportedly unwilling to renew Kenya’s bonds when they mature due to the rise in global interest rates and inflation, which is also blamed for making it expensive for the nation to pay its international debt.
According to the Kenya Kwanza alliance, the nation’s financial situation is dire and is having a detrimental effect on the economy. The alliance calculates that the nation is overburdened with debt and interest payments relative to a shaky revenue forecast.
“Our public finances are not in good order is something that can no longer be denied. Interest cost this financial year is projected to be Sh660 billion and total debt service at over a Ksh.1 trillion, against a projected (and optimistic) Sh2.1 trillion revenue target,” said Ruto.
“Interest cost is now the single largest expenditure item on the recurrent budget, exceeding the National Government wage bill (Sh550b) and dwarfing the county governments’ equitable revenue share (Sh370b).”
The Kenya Kwanza coalition attributes the economic unrest in the nation to a lopsided economic framework. According to the alliance, the nation engaged in capital-intensive projects that have a minimal or gradual multiplier effect on the bulk of its population, who are left in poverty.
The Nairobi Expressway and the Standard Gauge Railways have been singled out by Ruto as projects that have consumed billions of shillings while providing the general public with scant net benefits.
“In recent years, growth has been dominated by large public infrastructure projects (SGR railway and the new Nairobi Expressway for example), which have very little multiplier effect on the economy. Domestic financing of the same has crowded out the productive economy in the use of credit and other resources,” he said.
In addition, a growth in food imports into the nation is thought to have made it more vulnerable to the whims of traders and merchants. The alliance claims that during the previous ten years, food importation has increased from 10 to 17 percent, making the nation more susceptible to the present shocks to the world food supply.
