All eyes on economy as New Year begins
Kenyans crossed into 2020 against the backdrop of dwindling economic fortunes. Yet they are banking on improved money supply and optimism in the fourth quarter of 2019 to make things better.
The vow by President Uhuru Kenyatta in his New Year message not to relent in fight to slay the corruption dragon that has been blamed for stifling economic growth, worsening inequality and undermining national security, could further inspire investor confidence. Already the country is gradually climbing in the World Bank’s ease of doing business index.
Barring any shocks, better tidings that started to beckon at the tail end of 2019 are expected to spill over into onset of the new decade to improve financial markets outlook and give the economy some fluidity.
The controversial repeal of interest rate caps and the Sh85 billion supplementary budget coming against the backdrop of favourable weather conditions— albeit with ironic consequences— will no doubt be boost to an economy that is still on shaky ground.
But the positive forecast faces real threats: An increasing debt portfolio to pay for the country’s ambitious development projects and dwindling tax revenues. On taxation, the options are stark, given that most firms and taxable individuals are already overtaxed. What’s more, massive staff layoffs and shutdown of companies have compounded the situation, denying the economy the much-needed economic stimulus.
The State must initiate and implement more predictable borrowing policy frameworks and deal with loopholes in revenue leakages, and injecting efficiency in revenue collection. A modernised tax regime will ensure that the economy is stimulated in what will go a long way towards job creation.
Whatever it takes, the government must take care of the circulation of money and ensure that delays in paying suppliers doesn’t lead to low liquidity in the market, hampering business activities as witnessed last year, by paying suppliers in good time.
More importantly, Kenya must focus on the soft areas and leverage what has traditionally been it’s strength by boosting agriculture, whose fortunes have dwindled in the recent past with main earners such as coffee and tea taking a plunge.
As it is, what the economy requires is a stimulus package, but what gives? It is about time for a candid conversation on the country’s future.