Kenyans advised to brace for lean times
Finance and food security experts are advising Kenyans to tighten their belts to effectively cope with the increased cost of living.
Last week Kenya National Bureau of Statistics said the monthly inflation rate had risen to 6.58, the highest in the last 19 months.
KNBS attributed the escalated cost of living to an increase in food prices brought about by drought experienced in the country since last year.
“In the short term we need to tighten our belts. In the long term, we will need to put in place stringent fiscal and monetary policies to regulate our borrowing,” said Samuel Nyandemo, an economics lecturer at the University of Nairobi.
Nyandemo says the just concluded demonetisation exercise could also have contributed to the increased inflation by causing panic driven consumption.
Hike in tax
“When the demonetisation policy came into place, there was a rush into heavy consumption which translated into demand which did not match supply,” he explained.
He decried the current trend in government borrowing saying it had left the country in an awkward repayment position forcing Treasury to increase excise tax and consequently increase the cost of living.
His views were echoed by John Kirimi, the former chairman of the Kenya Association of Stockbrokers and Investment Banks, who said that in addition to Kenyans reducing spending, the government should reduce the cost of key inputs such as fuel and electricity as a short term measure to lower the cost of living.
“The moment you lower the cost of production, it should result in reduced prices for end products,” said Kirimi.
Timothy Njagi, a Senior Research Fellow at Tegemeo Institute called for continued monitoring of food security situation in East Africa to inform the next step of action.