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    Gunmen kidnap five Nigerian university students – police

    Nigerian university teachers union begins 2-week warning strike

    Gabon

    Gabon president’s party wins parliamentary majority

    Mali says capital under control after insurgent attack

    Mali to impose reciprocal visa bond requirement for US nationals

    Nigerian leader accepts embattled minister’s resignation

    Nigerian leader accepts embattled minister’s resignation

    Madagascar’s president has left the country on French military plane – French radio RFI

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    Madagascar president warns of coup attempt as more soldiers join protests

    Madagascar president warns of coup attempt as more soldiers join protests

  • Analysis
    • All
    • Climate Change
    • Digital & Tech
    • Economy
    • Energy & Power
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    • Society
    Five Years After the Coup in Mali: Are Stability and Growth Within Reach?

    Five Years After the Coup in Mali: Are Stability and Growth Within Reach?

    Cameroon President Paul Biya marks 41 years in power

    Paul Biya at 92: will defections weaken his grip on absolute power in Cameroon?

    The arrest of Ansaru terror leaders marks a strategic change for Nigeria: What could happen next?

    The arrest of Ansaru terror leaders marks a strategic change for Nigeria: What could happen next?

    Key issues for voters in Malawi’s 2025 elections

    Key issues for voters in Malawi’s 2025 elections

    India’s trade charm push targets East Africa

    How India-Africa Partnerships Are Transforming Global Trade

    DR Congo, M23 rebels pledge in Qatar to reach peace deal next month

    DRC’s latest peace deal is breaking down: what’s being done wrong?

    Ethiopia’s emergency medical response system and what other countries can learn from it

    Ethiopia’s emergency medical response system and what other countries can learn from it

    From Sunlight to Opportunity: Africa’s Solar Energy Revolution

    From Sunlight to Opportunity: Africa’s Solar Energy Revolution

    Cameroon’s conflict is part of a bigger trend: negotiations are losing ground to military solutions

    Cameroon’s conflict is part of a bigger trend: negotiations are losing ground to military solutions

  • Studies
    One in three South Africans have never heard of AI: what this means for policy

    One in three South Africans have never heard of AI: what this means for policy

    Social Media as a Catalyst for the Spread of Dangerous Wealth Ritual Myths

    Social Media as a Catalyst for the Spread of Dangerous Wealth Ritual Myths

    Overcoming Education Barriers for Young Mothers in Sub-Saharan Africa

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    Youth Empowerment Through Vocational Training in Rural Sub-Saharan Africa

    Youth Empowerment Through Vocational Training in Rural Sub-Saharan Africa

    Manufacturers in Ghana and Nigeria claim that although corruption damages businesses, digital technologies provide a chance to combat it

    Manufacturers in Ghana and Nigeria claim that although corruption damages businesses, digital technologies provide a chance to combat it

    Environmental Threats and Conservation Efforts in Namibia

    Environmental Threats and Conservation Efforts in Namibia

    Your teachers’ level of knowledge affects how well you perform in class: perspectives from 14 French-speaking African nations

    Your teachers’ level of knowledge affects how well you perform in class: perspectives from 14 French-speaking African nations

    Islamic Finance in Nigeria: Between Islamization and Shariah Non-Compliance Polemics

    Islamic Finance in Nigeria: Between Islamization and Shariah Non-Compliance Polemics

    What determines a return to civilian rule after military coups in Africa?

    What determines a return to civilian rule after military coups in Africa?

  • Infographics
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    South Africa uneasy about safety of citizens on Gaza aid flotilla

    South Africa uneasy about safety of citizens on Gaza aid flotilla

    François (Ngarta) Tombalbaye (1918-1975): First President of Chad

    François (Ngarta) Tombalbaye (1918-1975): First President of Chad

    Apollo Milton Obote (1925-2005): Former President of Uganda

    Apollo Milton Obote (1925-2005): Former President of Uganda

    David Dacko (1930-2003): The first President of the Central African Republic

    David Dacko (1930-2003): The first President of the Central African Republic

    Senegal buys belongings of former leader Senghor after deal with auctioneer, heir

    Léopold Sédar Senghor (1906-2001): Senegal’s former president, cultural theorist, and poet

    Former Nigerian President Obasanjo calls for collective responsibility for country’s development

    Olusegun Obasanjo: Former Nigeria’s military ruler (1976-1979) and president (1999-2007)

    Wangari Maathai (1940-2011): Kenyan social, environmental, and political activist

    Wangari Maathai (1940-2011): Kenyan social, environmental, and political activist

    Steve Biko (1946-1977): South Africa’s anti-apartheid activist and voice of Black liberation

    Steve Biko (1946-1977): South Africa’s anti-apartheid activist and voice of Black liberation

    Ousmane Sembène (1923-2007): Senegalese film director and writer

    Ousmane Sembène (1923-2007): Senegalese film director and writer

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    Namib Sand Sea, Namibia

    Namib Sand Sea, Namibia

    Kunta Kinteh Island, Gambia

    Kunta Kinteh Island, Gambia

    Isimila Stone Age site, Tanzania

    Isimila Stone Age site, Tanzania

    Rock-Hewn Churches, Lalibela, Ethiopia

    Rock-Hewn Churches, Lalibela, Ethiopia

    Koutammakou, the Land of the Batammariba, Togo

    Koutammakou, the Land of the Batammariba, Togo

    Okavango Delta, Botswana

    Okavango Delta, Botswana

    Mosi-oa-Tunya (Victoria Falls), Zambia/Zimbabwe

    Mosi-oa-Tunya (Victoria Falls), Zambia/Zimbabwe

    Cape Coast Castle, Ghana

    Cape Coast Castle, Ghana

    Stone Circles of Senegambia: Silent testimony to an ancient past

    Stone Circles of Senegambia: Silent testimony to an ancient past

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Home Regions East Africa

Kenya’s leader warns of major fallout after $80 billion debt relief effort fails

July 10, 2024
Kenya merges foreign ministry in cabinet changes
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The ballooning debt in East Africa’s economic hub of Kenya is expected to grow even more after deadly protests forced the rejection of a finance bill that President William Ruto said was needed to raise revenue. He now warns “It will have huge consequences.”

Facing public calls to resign, Ruto has said the government will turn to slashing a $2.7 billion budget deficit by half and borrowing the rest, without saying from where.

After anger over bloated bureaucracy and luxurious lives of senior officials helped to fuel the protests, Ruto also has promised funding cuts in his own office and said funding would stop for the offices of the first lady, the “second lady” — the wife of the vice president — and the wife of the prime Cabinet secretary. Almost four dozen state enterprises with overlapping roles will be closed.

Ruto has become deeply unpopular in his two years in office over his quest to introduce taxes meant to enable Kenya to repay its $80 billion public debt to lenders including the World Bank, the International Monetary Fund and China.

The public debt makes up about 70% of Kenya’s gross domestic product, the highest in 20 years.

How Ruto’s administration will find the money to pay off debt without further angering millions of Kenyans barely getting by, and without slowing down the economy, is the key question. The economy grew 5.6% in 2023.

Economist Mbui Wagacha, a former adviser to previous President Uhuru Kenyatta, said Kenya needs a professional budget and management body like the Office of Management and Budget in the U.S. Currently, Kenya’s treasury makes budget estimates and forwards them to the parliamentary finance committee, which creates the finance bills.

“Parliament has abdicated its mandate on the public finances in the Constitution and it’s looking after its own interests,” Wagacha said in an interview.

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He said further borrowing by Kenya could be “disastrous” and proposed a strategy of using diplomacy to attract investment and restructuring the debt in an attempt to get creditors to write off some of it.

Another economist, Ken Gichinga, agreed that government borrowing will slow down Kenya’s economy. Businesses still haven’t recovered from the effects of the COVID pandemic and the war in Ukraine, he said.

“When the government borrows more, interest rates go up. And when interest rates go up, businesses slow down, the economy slows down, due to the high cost of repayment,” Gichinga said.

Kenya’s president has advocated self-sustainability, saying the country should raise more revenue instead borrowing. “If we are a serious state, we must be able to enhance our taxes,” he said in May.

But Kenyans have rejected attempts to raise taxes as they struggle with rising prices on basic goods, even storming parliament during the recent protests.

Last week, days after announcing he would not sign the finance bill he once championed, Ruto said he had worked hard “to pull Kenya out of a debt trap” and that huge consequences lie ahead.

Wagacha said economic growth must come before the government increases revenue targets and tax collection.

“You create an expanded economy with employment and with investment, and people have money in their pockets. It’s much easier for them to hear about your request for taxes,” he said.

He suggested making access to low-interest credit easier for businesses in key sectors like tourism and agriculture, saying small businesses hold the key to Kenya’s economic growth as they tend to absorb many employees. That could help address high youth unemployment.

The government should incentivize businesses to create jobs with low taxation and lower interest rates, Gichinga said: “At the end of the day, we need a jobs-centered economic policy. That’s what we’ve been lacking.”

The IMF, which had suggested some of the controversial tax changes, has been a target of Kenya’s public dissatisfaction. Some protesters had posters with messages such as “IMF stop colonialism.”

In a statement late last month, the IMF said it was monitoring the situation in Kenya, adding that its main goal was to help it “overcome the difficult economic challenges it faces and improve its economic prospects and the well-being of its people.”

The IMF needs to do more for Kenya beyond focusing on debt sustainability and be a “strong development partner,” Gichinga said.

Source: AP
Tags: Debt reliefKenyaWilliam Ruto

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