Economic policy

President Ruto exits blocks with drastic economic policy decisions, orders

By Otieno Otieno

Kenyan President William Ruto faces a catch-22 situation in his quest to reverse some of his predecessor Uhuru Kenyatta’s policies to deliver on his campaign promises on the economy to bring down the cost of living.

On his first full day in office last Wednesday, President Ruto withdrew the state subsidy on gasoline, cut the relief on diesel and kerosene, indicating the imminent end also of the subsidy on flour basic corn.

The fuel subsidy introduced by the Kenyatta administration in April last year to defuse public apprehensions over the rising cost of living was due to end on September 30 under terms agreed between the Treasury and the International Monetary Fund (IMF) for a loan.

Dr. Ruto, eager to assert his authority early in his presidency, rushed to cut the program, saying it had failed in its purpose and was unsustainable.

Lily: Kenyan Ruto pledges to lower the cost of living “in 100 days”

He has indicated his preference for production subsidies and could use part of the Ksh 9.4 billion savings expected from the fuel subsidy cut to fund a plan to distribute 1.4 million bags of fertilizer. at reduced prices to maize producers for planting during the current short rainy season.


While the government is counting on the fertilizer program to improve maize production for at least the next three months, it is also concerned about high transport and production costs resulting from cuts in fuel subsidies.

Bus operators were due to raise fares by 20-30% on Friday due to the rise in the cost of diesel announced on Thursday evening – a decision that will put more pressure on household budgets, and will particularly affect urban workers, most of whom will be forced to walk to work.

Transport is the third highest expenditure for Kenyan households after food and housing.

A 2018 study by Deloitte found that a majority of commuters used matatu (mini public transport buses) and boda-boda (motorcycle taxis). In the capital Nairobi, 47% of residents prefer to walk, according to the study.

“Upward” Promise

The findings of another study released earlier this year by Nairobi Stock Exchange-listed Car & General, which sells motorcycles and motorcycle parts, put the number of boda-boda riders at 1, 2 million and the number of people whose livelihoods are supported by the company at six million.

With Dr Ruto’s subsidy cut triggering a significant increase in fuel prices, boda-boda is likely to see daily commutes drop drastically, potentially causing unease in a sector the president has aggressively courted through his slogan. bottom-up campaign.

Public discontent could be even more widespread if the president’s removal of fuel subsidies ends up leading to drastic increases in the cost of food and other household goods.

Diesel is widely used in Kenya for transportation, to power agricultural and manufacturing machinery, thus determining production costs.

Lily: Kenyan consumers hit by fuel and electricity price shocks

Since the beginning of the year, Kenyans have expressed frustration over the unprecedented rise in prices of essential foodstuffs such as maize and wheat flour and cooking oil, mainly attributed to chain disruptions supply shortages caused by the Russian war in Ukraine.

Earlier this month, global risk assessment firm Verisk Maplecroft said Kenya was one of the countries, along with Peru, Iran and Sri Lanka, facing the threat of civil unrest due to the cost high of life.