Economists welcome Ruto's purge but want more done to ease cost of living

 

President William Ruto held a special cabinet meeting at State House Nairobi on July 11, 2024. [PCS]

In firing his Cabinet Secretaries, President William Ruto appears to be addressing some of the concerns raised by Kenyans, who have been agitating against a government that has not been responsive, but also insensitive to their needs.

Analysts termed President  Ruto’s move yesterday as a new beginning but also noted that the President should push further to rid the country of corruption and improve on service delivery.

The firing of CS follows the weeks of protests by youthful Kenyans that was initially against the Finance Bill 2024 which they termed as punitive and noted would significantly increase their cost of living.

The president withdrew the Bill that had been passed by Parliament but protests had already snowballed, with the protesters demanding transparency within government.

The CSs who Ruto fired have been accused of being insensitive to the needs of Kenyans, some of them seen as corrupt going by their opulence and all of them watching while the cost of essentials went beyond the reach of many Kenyans.

Ruto yesterday said that upon reflection of the incidents that have taken place in the recent past, particularly the agitation by the country’s Gen Z, he had decided to dismiss the Cabinet Secretaries and the Attorney General with immediate effect. 

He, however, retained the Prime Cabinet Secretary, the docket held by Musalia Mudavadi, who also doubles up as the Cabinet Secretary for Foreign and Diaspora Affairs.

He said he would embark on a process that would result in the formation of a more inclusive government that would help him deliver on his mandate.

The CSs who President Ruto fired have been accused of being insensitive to the needs of Kenyans, some of them seen as corrupt going by their opulence and all of them watching while the cost of essentials went beyond the reach of many Kenyans.

The markets are likely to start reacting today to the decision.

Analysts say the impact on the economy, including on such issues as cost of living, relations with the international community including lenders and perception by investors could be seen in the coming weeks and months. 

“It is certainly the start of a new beginning,” said Ken Gichinga, Chief Economist at Mentoria Economics.

“I think the objective is to restore confidence among Kenyans and also among investors, both local and foreign. If you look at how interest rates have been rising, it was an indication that the risk profile of the country had been rising. It was critical to restore confidence which affects interest rates. It is a first step, but there is still a long road ahead.”

He added that the new CSs as well as the strategies they will adopt will be key in determining the shape that the economy will take, including the perception by investors.

“A big chunk will come to who will be appointed in the new cabinet and the fiscal policy of the country and this can be determined once these dockets are substantially filled and the new strategies on the fiscal policy are in place,” he said.

“Investors and consumers will want to see whether the new strategy will be on revenue raising or will there be a change in the tax policy and such aspects. It is still early in the days, but investors are really watching, particularly on the fiscal policy strategy for the country, that is what investors especially sovereign bondholders will be paying attention to.

Dr Samuel Nyandemo, an economics lecturer at the University of Nairobi, said while this is a move in the right direction, the President needed to do more. He is of the opinion that the Principal Secretaries, who are the accounting officers across ministries should not have been spared the sack. 

“It (dismissing the CSs) is very sensitive to what businesses and consumers have been calling for. More importantly, however, is that he should sack all the PSs because they are the watchdogs who have not been doing the right thing,” he said.

“Sacking CSs is good but is not enough. He should do more… we want to see a national face when it comes to PSs.” 

Nyandemo added that the President also needed to be bold in his fight against corruption. 

Runaway corruption has been among the issues that Kenyans have been protesting against. During public participation for the now rejected Finance Bill 2024, Kenyans and business lobbies had noted that the government should seal leakages that result in the country losing billions.