• Irungu Houghton

Impunity and indebtedness fuels our fiscal crisis

Safaricom’s data and call price hikes announcement this week fuels anxiety at the rising cost of living after new taxes last month. As Government rams deeper into our pockets, we face a period of austerity in our homes, county and national economies. Our lifestyles are not the problem, the problem is we have allowed others to budget for us. A mashujaa day reflection.

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A battery of public taxes and levies have driven up the costs of essential commodities and services by between ten and fifteen per cent. The cost of living may have gone up by 50% from last year. Fuel, electricity, telephone and internet data, banking and money transfers and foodstuffs are spiking all around us. While this affects us all, it will have a distinct impact on poor families, the gap between the rich and poor will widen and the bill of rights could be placed on hold.


The impact of household budget cuts, job redundancies, out of school and under-fed children and unmanageable health bills is showing up in our homes, extended families and given that we all live 5 kilometers from an informal settlement, in all our neighborhoods. Most of us are now going into lifestyle adjustment mode.


We are getting real serious about the places we eat and what we eat. We are considering new ways of getting to and from our workplaces and the schools our children can go to. Deal-making and side-hustling is the new national sport. These lifestyle adjustments might make minor financial sense, but in this period of austerity, it is like opening an umbrella in a torrential rain storm.


Our lifestyles have not caused the current rain storm. Nor has the costs of devolution and political representation, heavy as it is. Impunity and indebtedness is at the center of the current financial crisis. The lavish salaries and benefits of elected leaders cost tax-payers just under Kshs 24 billion annually. This is 1% of the annual budget. Compare this against 30% of the budget that is estimated to be routinely stolen and stuffed into mattresses, magunia, banks and tax havens all over the world and we can see where the real gap is.


Before the Jubilee administration came to power in March 2013 there were 3,355 corruption cases. In 2018, this figure has swollen into 8,044. Many of these economic crimes are responsible for the Kshs 5 trillion in illicit and untaxed income that is currently sitting in bank accounts outside the country.


This year, the Government plans to take 45% of the budget or Kshs 658 billion and pay back both domestic and foreign creditors such as the Chinese, the World Bank International Development Association and several European creditors. At current trends, the national debt will expand from Kshs 5.1 to 5.6 trillion by next year. Unless this is interrupted, alongside the instruments of power President Kenyatta will hand over to his successor in 2022, there will be a demand letter worth kshs 7.1 trillion tucked firmly in front of Article 1.


The primary reason for the existence of national and county governments is to realize the fundamental rights and freedoms spelt out in the national constitution. They are also obligated to manage public finance and the economy in an open, participatory, prudent, accountable and fair manner. As citizens we need to ask how we let our Government deviate from this purpose and what we need to do next.


Only a fraction of us have taken any interest in county and national budget-making and oversight processes. We have left the whistle-blowing to the Auditor-General and the National Integrity Alliance and the demonstrating to movements like #StopTheThieves. When the Motorist Association of Kenya told us to park our cars in non-violent protest, we chose to drive in earlier. Too busy chasing the shilling, that shilling has proved to be very costly to us all.


Budget cuts and tax hikes that undermine any of our political, social or economic rights directly violate the constitution. For Kenyans to be truly free from fear and want, it will take more than we have done to date. Our businesses will have to size up to the crisis. Smaller “kadogo” products like “coke mwala” and others will not fix this. Our Government will have to aggressively pursue and recover corruption proceeds, freeze borrowing, rationalize its parastatals and start doing human rights assessments of the future impact of reforms. None of this requires a referendum or am I missing something important?

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First published Sunday Standard, October 20, 2018. Kindly reproduced here with permission from the Standard Group

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