Ruto’s political reforms can stimulate early economic growth and quick wins


Ruto’s political reforms can stimulate early economic growth and quick wins

President William Ruto addresses Kenyans after taking the oath of office September 13, 2022 at Moi International Sports Centre, Kasarani. PHOTO | JEFF ANGOTE | NMG

The accession of William Ruto as Kenya’s President this week offers Kenya a new opportunity to reshape and stimulate the socio-economic landscapes of this great nation. In his inaugural address, the President outlined a fairly transformative agenda aimed at purging and reforming what hasn’t worked.

His agenda seems to focus mainly on improving policies, institutions and governance to drive socio-economic change. This approach can deliver early economic results without necessarily requiring huge budgets, especially now that the Treasury is tight on cash.

Tax reform appears to be an area that the new government plans to scrutinize extensively in order to maximize tax revenues while addressing a number of tax “nuisances” that can hamper economic growth and thereby limit the potential for higher tax revenues.

The President mentioned tax collection-friendly methods, which means that the KRA develops effective PR methods for those who cannot or do not want to pay taxes. This is indeed very tricky terrain considering there are many cases of tax evasion and dishonesty in Kenya.

In recent years, the KRA has systematically increased tax revenues, giving credence to the fact that the country can indeed fund its development budgets from its own tax revenues over time, with reduced reliance on expensive debt.

The caveat, of course, is that every qualifying taxpayer pays and that every shilling collected is fully accounted for in expenses, cleaning up leaks of inefficiency and dishonesty. For this reason, tax reforms should be carried out at the same time as a review of financial management systems.

President Ruto announced a quick rescue plan for agriculture with affordable fertilizers at almost half price, a very welcome and timely measure given the short rain-planting season ahead. The President recognized the counties’ responsibility to revitalize agriculture with appropriate additional funding from national government.

Serious reforms in agriculture began in 2020, but momentum is now needed to achieve sustainable food security, more jobs and increased capacity for export crops and agricultural processing.

The other growth area that the President wants to give early attention to is the SME sector, which will prompt the creation of a dedicated ministry for cooperatives to optimize access to credit, among other things.

As the new government configures long-term funding for development projects, early policy reforms, many of which have been enumerated by the President, can deliver quick wins that don’t require large amounts of funding.

Kenyans can only offer goodwill and support to the new government while expecting that their expectations will soon be met.

George Wachira is a petroleum consultant, [email protected]

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