In about six months, the first rounds of payments for monthly fuel, US$ 3.6 billion will fall due, and counties need Kenya shillings 125 billion in allocations for January to March 2023. Kenya is not alone in these challenges and there are fears that a global financial recession with its attendant challenges like was witnessed with the great depressions in 1930’s and 2007/2008, and also the impacts that followed the 2020/2021 COVID 19 pandemic disruptions might face countries. It is a financial perfect storm and crisis that presents an opportunity to address and change the trajectory of development. The word crisis in Chinese language has two components – danger and opportunity.
Three issues are needed for us to turn the crisis into opportunity. First, the lessons from the famous Economist John Maynard Keynes who developed the Keynesian principles prescribed the need to utilize government spending to spur local business and the economy. Government at national and county levels should come up with more public spending akin to the new deal by president Roosevelt of the US in 1933 to 1939. The new deal was a set of programmes and projects, public works, financial reforms and regulations that supported farmers, elderly, youth and unemployed persons. These programmes focused on three R’s namely – relief to the unemployed and the poor; recovery of the economy back to normal; and reform of the economy to avoid recurrence of the depression and financial crisis for our case. Enhanced public spending will increase jobs and employment opportunities and increase taxes due to the government.
Secondly, Keynes advocated for tax cuts to lower the cost of energy and doing business. The country should institute tax reforms and policies to encourage more collections, disclosures and inclusion in taxation. According to the 2022 Economic Survey, there are 18.3 million jobs holders in Kenya, of which only 2.9 percent are formal and of whom tax collections are done. Tax reforms and policies will ensure that be done in such a way that even small holder farmers and businesses and pastoralists contribute to payment of taxes, all of us as patriotic Kenyans have a duty to pay taxes. With more taxes, we become self-dependent country. Thirdly, there is need to implement well-structured, ethically sound and production linked Public Private Partnerships (PPPs) programmes and projects that are accountable and transparent to ensure that major projects that support the economy are implemented Dr. Mutegi Giti, Urban management, Public Private Partnerships (PPPs) & Environment Specialist. mutegigiti@gmail.com, @danielgiti.
Dr. Daniel Mutegi Giti 