Kenya’s economy has been struggling under President William Ruto’s government due to rising debt service, revenue shortfalls, and high prices for basic commodities. Ruto has accused tax officials of corruption and collusion with tax evaders which has led to reduced government revenue. He made these accusations during an event streamed live on social media. Ruto was elected in August with a promise to improve the situation of the poor, but the economy has not improved and protests have erupted.
Kenya’s external debt stood at $34 billion as of January, which is part of a huge debt inherited by Ruto from his predecessor Uhuru Kenyatta. The annual interest payments on domestic government bonds have surged to 680 billion shillings ($5.09 billion) this year from 180 billion shillings ($1.34 billion) almost a decade ago, which has impacted government cash flow.
Civil servants have complained about delays in salary payments, and local governments have threatened to shut down in protest over delays in cash payments from the central government. Ruto has accused the Kenya Revenue Authority (KRA) officials of resisting and sabotaging past attempts to digitize revenue collection to prevent loopholes from being plugged.
Kenyan authorities are fighting corruption, and tax collection agencies are subject to heavy scrutiny. In May 2019, 75 KRA officials were arrested on charges of aiding tax evasion and bribery.
To boost revenue, Ruto’s administration has proposed tax increases in a proposal to be submitted to parliament next month, angering the public and the opposition. Kenya lags behind other countries like South Africa in terms of tax revenue as a percentage of annual economic output.