Peter Macharia CEO Jijenge Credit Limited
Kenyan economists and policymakers are positive in their forecasts of growth prospects after President William Ruto named the second batch of his cabinet.
According to the economists, this could now offset “excess caution and excess gloom” about the economic outlook, according to economic observers.
The economists who are keenly following the new developments are optimistic Ruto’s move to form a new broad-based government can now deliver stable economic policies to revive growth but are cautious that the new Cabinet can reconcile stark ideological differences.
“It offers clarity, but we have to wait and see how the new Cabinet will attempt to undo some of the economic challenges faced by the country today,” said Peter Macharia – the CEO of digital lending firm, Jijenge Credit Limited, which provides access to logbook loans and title deed loans in Kenya.
“People’s expectations are important in shaping their decisions, from whether to invest in expanding a business to borrowing or spending on new ventures or acquiring an asset,” said Macharia, labelling the new–found expectations “animal spirits”.
“Whichever theory applies, what we think will happen to the economy in the future determines what we decide today — and thus shapes the future.
“What investors and majority of Kenyans want is more focus on promoting local production and predictable tax policies as well as leveraging in as much private investment as possible to create an attractive investment for more capital and to support the ambitions of this Government,” said Macharia.
Wider economic developments will however also be a factor, according to Macharia who believes the president should now unite the country and focus on rapid, inclusive and sustainable economic growth, the promotion of fixed capital investment and job creation for the agitating youth. Mr. Macharia, through Jijenge Credit, offers affordable and flexible title deed and logbook loans to empower the population amid the tough economic times.
The high interest rates have remained elevated as the Central Bank of Kenya (CBK) continues to battle inflation following a tough 2023 and the lingering consequence of the COVID-19 slowdown, and the new move will likely have different consequences for the investing environment.
The weekly protests however, was as a result of the introduction of a new finance bill that would levy punitive taxes on everyday essentials, including sugar, bread, and cooking oil—a policy that would hit poor Kenyans particularly hard.
The same bill – which has since been dropped following public uproar, had also set aside vast sums for the renovation of the president’s residence and other extravagant expenditures.
It was a move that enraged a new generation of Kenyans – or Generation Z and a host of millennials, many of whom voted for President Ruto just two years ago when he said he would create a million new jobs but now feel that the promises made to them are being betrayed and their futures are being stolen.
The extra taxes were supposed to raise close to Ksh.350 billion while about Ksh.600 billion was going to be borrowed.
According to the President, the proposed tax measures were part of efforts to cut the debt burden of over $80bn (Ksh.10.3 trillion). About 60% of Kenya’s collected revenues goes to servicing debt.
