Amidst the soaring cost of living in Kenya, low-income households find themselves grappling with the harsh realities of high inflation. A recently released report by the Kenya Institute for Public Policy Research and Analysis (KIPPRA) sheds light on the hardships endured by the nation’s less privileged citizens throughout 2022.
Director of KIPPRA, Rose Ngugi, emphasized the significant challenges faced by low-income Kenyans due to the escalating cost of living. Ngugi highlighted that these households typically allocate a substantial portion, roughly 60%, of their income to basic food expenses. As a result, any surge in food prices directly impacts their overall quality of life.
KIPPRA’s Kenya Economic Report 2023 outlines efforts to combat the alarming 9.6% inflation rate experienced in 2022. The government has set its sights on narrowing this figure down to a more manageable range of 2.5% to 7.5%, aligning with the target set by the Central Bank of Kenya. Moreover, the report sheds light on a concerning statistic: a staggering 77% of the workforce in Kenya currently earns below the minimum wage, a figure that only covers half of their essential living costs.
Kenyan Finance Minister, Njuguna Ndung’u, has identified a significant factor contributing to this economic struggle: the dominance and monopolistic behavior of certain companies, which stifles healthy market competition. Ndung’u pointed out that these issues have pushed many Kenyans into poverty.
In addition to the escalating cost of living, Kenya faces the daunting task of servicing a substantial debt incurred from infrastructure projects such as road and railway development. Under the leadership of President William Ruto, the government is prioritizing robust revenue collection as a means to tackle this financial challenge.
Economist Samuel Nyandemo, a lecturer at the University of Nairobi, stressed the importance of government support for its citizens through tax reforms. Nyandemo proposed a gradual removal of subsidies on essential items such as maize flour, cooking oil, and fuel, along with a reduction in taxes that directly affect the cost of living.
September marked a new high in fuel prices in Kenya, with gasoline reaching $1.42 per liter, further straining the financial resources of the already burdened population.
In an effort to regain economic stability after a decade of extensive borrowing, the Kenyan government has reached out to creditors, including China, for an extension of time.
Addressing the rising cost of living is not only crucial for low-income earners but also essential for Kenya’s overall economic prosperity. It is a challenge that demands sustainable solutions to ensure a brighter future for all citizens.
Photo Source: Habitat for Humanity
By: Montel Kamau
Serrari Financial Analyst
1st October. 2023
