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New York Times
04-05-2025
- Business
- New York Times
‘People Who Are Salaried Are Crying': Taxes on Workers Add to Debt Misery
The pay stubs tell the story. Hefty deductions to help cover the cost of Kenya's new funds for affordable housing and health insurance. More money subtracted for jacked-up contributions to the National Social Security Fund and an increase in the tax rate. In a matter of months, Kenyans with a 45,000-shilling-a-month salary — roughly $350 — saw their take-home pay shrink 9 percent, to $262. 'People who are salaried are crying,' said Kennedy Odede, the founder of a self-help association in Nairobi's Kibera slum. The increased payroll taxes are one element of President William Ruto's desperate bid to raise revenue to keep the government running and pay off Kenya's staggering foreign debt. New excise taxes were put on sugar, alcohol and plastics. A tax on business profits doubled to 3 percent. Government fees for money transfers and for phone and internet data services went up 15 to 20 percent. A tax on every import, including essentials like wheat and cooking oil, to be used for railroad development was increased to 2 percent from 1.5 percent. Some exemptions for retirees were scrapped. The list goes on. Tax increases are never popular. But the impact on countries like Kenya, with low incomes and crippling debt, is particularly acute. Years of harum-scarum borrowing and spending combined with economic wallops from the Covid-19 pandemic, soaring interest rates and inflation helped drive up Kenya's debt to $80 billion. Kenya has to use nearly 60 percent of its revenue for paying off its loans. It is a common problem across Africa, where many countries spend more on interest payments than on health or education. At the same time, countries need billions of dollars in new financing for basic medical care, schools, clean water, sewage systems, paved roads and climate-related disaster relief. Getting the country's finances in order is a prerequisite for long-term growth. But there are limited options to raise such revenue in Kenya, where 40 percent of its 52 million people live in poverty and youth unemployment is estimated to top 25 percent. Small businesses and subsistence agriculture make up much of the economy. According to one estimate, 83 percent of the country's labor force works in jobs that are out of tax collectors' sight, including as hairdressers, maids, street sellers and drivers. That means the sliver of the population that works in enterprises that record salaries bears most of the tax burden. 'Our buying power has really decreased because of the taxes,' said Elizabeth Okumu, who works at Shining Hope for Communities, or SHOFCO, the nonprofit organization Mr. Odede started two decades ago. The country's economic crisis has pushed the value of the shilling lower in relation to the dollar, meaning that the cost of imports has soared. Six months ago, a thousand shillings ($7.73) were enough for cooking oil, flour, rice and sugar, said Ms. Okumu, chairwoman of SHOFCO's urban network in Nairobi. Now, she said, she can buy only sugar and flour with that same amount. Last year, proposed tax increases set off deadly riots in Nairobi, the capital. More than 50 people were killed, and part of Parliament was set on fire. The government temporarily backed down, only to reimpose many of the additional taxes and fees a few weeks later. The government has been talking to the International Monetary Fund about a new loan package. The fund is likely to ask for additional guarantees that the Ruto administration will cut spending and raise more revenue. But you can't squeeze much water from a wrung-out towel. Behind the widespread discontent with specific policies is a deep cynicism about the government's ability to either pay back the debt or provide essential services. Regular reports from the country's auditor general, Nancy Gathungu, detail gross examples of corruption or mismanagement. At the end of last year, for example, she said, the government could not account for more than $1.24 billion that had been earmarked for debt payments. In March, Ms. Gathungu reported that $64 million worth of government-funded Covid-19 vaccines had never been delivered. Critics have also fumed about extravagant spending by government officials. 'Ruto says we need to pay our debts, but there are no public services to show for it,' said Tatiana Gicheru, a student at Strathmore University in Nairobi. 'I can't walk into a government hospital and get any services.' Ms. Gicheru, 21, sat outside Java House, a coffee chain in Nairobi, and sipped a latte with her friend Jewel Ndung'u. Ms. Ndung'u, 25, graduated from Strathmore two years ago and has been looking for full-time work as an analyst or a developer. From September to January, she said, she applied for 73 jobs. She got half a dozen callbacks and no job offers. Where is the affordable housing? Where are health services and public transportation? Ms. Ndung'u asked. Ms. Gicheru added, 'Suddenly the system is crumbling.' Ms. Ndung'u said she would rather see Kenyans directly pay off the debt to China, the country's biggest bilateral creditor, by using M-Changa, a digital fund-raising platform, instead of giving the money to the government through taxes and trusting it to do it. As taxes rise, Kenyans have grown angrier about the lack of public services. In November, a crowd of people frustrated about dilapidated roads in Syokimau, a few miles south of Nairobi's main airport, jeered as they forced their council representative to walk through flooded, muddy streets. In the southwestern part of Nairobi is Kibera, considered the largest urban slum in Africa. Its dirt streets teem with shoppers, pedestrian commuters, peddlers, hustlers, students in neat uniforms and residents filling bright yellow jerrycans with clean water from coin-operated taps. They navigate around piles of garbage and occasional raw sewage as well as motorbikes and bicycles hauling oversize loads better suited to a sport utility vehicle. There are no government-funded sanitation services in Kibera. The jampacked skyline features ramshackle homes of plasterboard, rusted roofs, and a forest of haphazard poles and wires on which illegal electricity hookups hang like Christmas ornaments. Benedict Musyoka, a youth community organizer in Kibera, said a young man had told him: 'I won't marry.' Earning enough to support himself is hard enough, let alone with a wife and child. And the man had a degree. 'You are taxing hard, and we have no jobs,' Mr. Musyoka said. With Kenya's level of debt, there are no easy options, said Thys Louw, a portfolio manager at Ninety One, a global investment firm in London. Expanding the revenue base — bringing more businesses and people who are not currently paying taxes into the system — is crucial, he said. And there are too many exemptions. In Kenya, taxes amounted to 16.6 percent of the country's total output in 2022, according to the Organization for Economic Cooperation and Development. The share is not unusual in Africa, but half the amount found in richer industrialized nations. June will be one year since the riots, and talk of commemorative gatherings and further protests is bubbling. That is also when the government will be finishing a new budget, which could possibly include further tax rises. Many people like Ms. Okumu at SHOFCO fear there will be more riots. People work so hard, she said, hoping 'that tomorrow they'll see the light.' 'But when tomorrow comes, it's still darkness.'
Reuters
31-01-2025
- Reuters
Kenya's violence epidemic: women train to fight back
Summary Police say 97 women killed in femicides between Aug and Oct Data is imcomplete but numbers appear to be rising Economic hardship fuels violence against women, say activists Insufficient legal protections; spousal rape not criminalised NAIROBI, Jan 31 (Reuters) - From the young woman brutally murdered and dismembered in a short-term rental apartment to the Olympic runner set on fire by her estranged boyfriend, a surge in violence against women in Kenya has spurred many to prepare themselves to fight back. At least 97 women across Kenya were killed in femicides - intentional killings with a gender-related motivation - between August and October of last year, according to police figures. The police did not provide statistics for earlier periods, but according to figures compiled by the Africa Data Hub collective based on media reports, there were at least 75 femicides in 2023 and 46 the year before. Activists said the recent upward trend is felt across Kenya's impoverished informal settlements, where women's efforts to protect themselves have taken on fresh urgency. Inside a church in the Korogocho area of the capital Nairobi, Mary Wainaina, 93, thumped a punching bag. "No! No! No!" she shouted, before running away from a classmate pretending to be a male aggressor. For the dozen members of the class, who refer to themselves as Cucu Jukinge, Swahili for "Grandma protect yourself", the lessons have never been purely theoretical. The course was started nearly 25 years ago by an American couple working with local residents after several women were raped and killed in Korogocho, an impoverished and crime-plagued sprawl of iron shacks along the Nairobi River. Shining Hope for Communities, a non-profit, said it had supported 307 survivors of gender-based violence in Korogocho between October and December alone. A few years ago, Wainaina said she used her self-defence skills to fend off a man who tried to rape her. Esther Njeri Muiruri, 82, said she found the current surge in violence against women just as worrying as the wave of attacks that prompted the class's creation. "It's something that scares us, to see young mothers and young women being killed," she said, as a classmate nearby practised striking a would-be attacker with a cane. 'I WARNED YOU' Gender-based violence has long been a major problem in Kenya because of patriarchal views, socioeconomic inequalities and insufficient legal protections, researchers say. For example, Kenyan law does not criminalise spousal rape, meaning it can only be punished under laws covering non-sexual assaults. Alberta Wambua, director of the Gender Violence Recovery Centre, said economic hardship fuelled such violence as men frustrated by their financial struggles lashed out at women. Kenyan police routinely fail to respond to complaints of gender-based violence, often considering them private matters, Betty Kabari, an activist with End Femicide Kenya, told Reuters. "We have a lot of cases of domestic violence where it's not that the perpetrator is not known," she said. "They are known, but the police have no interest in following up." The professional runner Rebecca Cheptegei, whose ex-boyfriend killed her in September by dousing her in petrol and setting her alight, had gone to the police at least three times last year to report threats and physical abuse by him, her family said. In an interview, a police spokesperson said the police were taking the issue of femicide seriously and that the Directorate of Criminal Investigations had recently established a Missing Persons Unit to concentrate on the murders of women. But activists say they see few signs of progress. When several hundred people marched last month in Nairobi against femicide, the police fired teargas and arrested several of them. The police spokesperson later acknowledged "mismanagement" in the handling of the demonstration. The following week, the government created a presidential working group that it gave 90 days to deliver recommendations for addressing femicide. For now, the Cucu Jukinge said they could only count on themselves. Beatrice Mungai, 81, recalled the time a young man tried to break into her house. "I quickly started kicking him in his private parts three times. He started screaming asking me not to kill him," she said. "I told him: I warned you."
