By XN Iraki
The generation of Kenyans born between 1997 and 2012 – the Gen-Zs – have borne the brunt of the country’s slow economic growth. If a country has slow economic growth, it typically experiences higher unemployment rates, reduced income levels and decreased investments. It leads to an overall lower living standard.
Over the last 10 years, between 2013 and 2023, Kenya’s average growth rate has been 4.52%. This is less than half of the 10% growth rate that President Mwai Kibaki had envisaged in Vision 2030.
The national development plan’s goal was to transform Kenya into a middle income country providing a high quality of life to all its citizens by the year 2030. But Kenya is still far from it.
I have studied several aspects of Kenya’s economy over the past decade and want to shed light on the economic roots of the protests.
The finance bill, which proposed several tax hikes, was the trigger for the protests, but the anger had been accumulating for years, since independence, when some of the pressing national problems were not adequately addressed. That includes population growth, land degradation, corruption and predominance of politics over economics.
The fact that 80% of the Kenyan population is below 35 years old demands that the government immediately take new and innovative approaches to creating economic opportunities.
Perfect storm
Several economic factors have come together, creating the perfect storm for these mass protests.
First, young Kenyans have endured hard 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 over 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, Ruto promised to lower the cost of living if he won the elections. He also promised the downtrodden, popularised as “hustlers”, better jobs. And they voted for him in droves.
But in two years the economy did not grow as fast as expected. And the hustlers’ patience ran out.
They have seen no transformation in their economic lives. This is despite the economy achieving a growth rate of 4.9% in 2022, edging up to 5.6% in 2023. This growth was not enough to deal with the economic backlogs. Hence, the popular question I have been asked as an economist is: if the economy is growing, where is the money?
The second factor is the high number of frustrated, educated young people in the country.
Kibaki offered free education and 100% transition from primary to high school. This raised not only the literacy levels, but also expectations.
But Kenya’s failure to create adequate opportunities for its educated young people has come back to bite political leaders. Those young people are at the forefront of the protests.
Gen-Z are more educated than their parents. They have degrees, diplomas and access to more information through the internet. They are also cosmopolitan, less tied to their tribes or political parties. That makes them easy to mobilise.
Despite being educated, many are jobless. Economic growth hasn’t kept pace with, or outpaced, population growth – resulting in limited job opportunities in the formal economy. The alternative has been the informal sector, which has more than 80% of the jobs. Such jobs offer low pay and low prestige, and no security.
Third, young people have been contrasting their miserable lives with those of political leaders who flaunt their wealth. Conspicuous displays of wealth, from cars to watches, has angered Kenyans, more so because many struggle to make ends meet.
Fourth, there is corruption, a perennial problem which has become a major source of anger. Gen-Zs feel corruption has stolen their future. They see it everywhere, from roadsides to offices. The word “tenderpreneur” is now a byword in Kenya. Tenderpreneurs make money by fraudulently getting government tenders and inflating the prices.
Fifth, they have more economically demanding needs – created by what their parents have provided for them and what they have seen others have.
Bad to worse
The last straw, and trigger for action, was the 2024 finance bill.
It sought to expand the tax base so that more Kenyans pay taxes. Gen-Zs saw the finance bill as adding to their economic woes and those of their parents, already burdened by the high cost of living as prices rise. Many are asking where the tax money goes. Many feel it’s either stolen or misused. The bill proposed a raft of taxes which the citizens felt would further raise the cost of living.
Reports of firms closing shop in Kenya, leading to job losses, ostensibly because of taxes, may have raised the anger. With great 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 makes up 35% of the GDP – would have been caught in this widened tax net. The government requirement that taxpayers use technology to track their sales did not go down well with small business owners.
Add the proposal by the Kenya Revenue Authority 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 World Bank are calling the shots in Kenya, making economic decisions for the country and eroding its sovereignty and independence.
Where do we go from here?
Withdrawal of the finance bill will not end the anger. Economic transformation takes time. The government has not convinced Kenyans on that.
The government should focus on low-hanging fruits like revising Vision 2030 with Gen-Z input. It could also get a higher goal akin to Vision 2030. What is the Kenyan dream? Can it be articulated?
The Gen-Zs are learning from others. Can Kenya learn from others, like the New Deal that helped the US confront the aftermath of the Great Depression?
Jobs are created mostly 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 Kibaki? How did he raise taxes without protests? Showing where the tax went?
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.
The Gen-Zs have a cause to protest. But the solution is harder than protesting. It calls for patience, on their part and that of the government. Kenyans are awaiting implementation of Ruto’s economic proposals after the withdrawal of the finance bill. That will be a good start.
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