Mark Suzman
The violent protests that began in Nairobi in June appeared to erupt suddenly, a direct response to the government’s proposal of a contentious finance bill the month before. But the economic crisis that motivated the legislation, which would have raised taxes in part to pay off the country’s debt, has been years in the making. Kenya’s debt burden has forced its leaders to face a series of impossible choices. Last year, they slashed the federal budget, including health spending, to provide funds for debt servicing; the government also delayed salary payments to civil servants. In February, despite these measures, Nairobi had to issue an international bond at an eye-watering ten percent interest rate, compared with roughly six percent on bonds it issued in 2021, to refinance its existing debts and meet development needs. Kenya is now spending 75 percent of its tax revenue on debt service.
Under pressure from the protests, President William Ruto rejected the finance bill after it received parliamentary approval. But Kenya’s larger crisis remains. Like many countries in Africa and across the developing world, the economic gains Kenya made in the two decades preceding the COVID-19 pandemic are slipping away. In 38 percent of countries eligible for development assistance from the World Bank, per capita GDP is lower today than it was before the pandemic—a drop the bank has described as “a historic reversal in development.”
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