16-09-2023 by Freddie del Curatolo
Kenya has been facing its most serious economic crisis in its history since the beginning of the year.
The national debt is dangerously approaching the $72 billion mark, and the repercussions of this huge hole are made even more dramatic by the collapse of the national currency against the dollar and other foreign currencies.
The American currency, which is still indispensable for international trading and for purchases of the raw materials the country needs, has surpassed 146 shillings to a dollar and this has primarily affected the rise in fuel prices. Yesterday, for the first time, petrol registered 212 shillings for a litre at the petrol station. Almost one and a half euros. When you consider that, with the shilling at 113 and petrol at 190, prices were down 30% in January, the surge is frightening.
Not least because everything now depends on the price of oil: any product is transported particularly by road, not rail, so if petrol rises, so do the goods transported. Electricity also largely depends on oil, so factories have to increase their production costs and consequently their sales costs, and so on.
The dollar, for its part, raises all other prices, especially import prices.
All this then falls on everyday life and especially on the survival of that segment of Kenyans, about 40 per cent, for whom even an extra twenty shillings a day is a catastrophe.
While President William Ruto, who in one year in power has not managed to do better than his predecessor Uhuru Kenyatta, is trying hard to reduce the country's domestic expenditure, fighting the scourge of corruption and cutting unnecessary costs, but has inevitably had to raise taxes and insert new ones, Trade Minister Moses Kuria has not given high hopes, regarding the rise of petrol. "It will increase by 10 shillings per month at least until February," he announced. Ruto's chief advisor, economist David Ndii, also spoke of a 'dangerous situation'. And one does not need luminaries to understand this.
In the current scenario, tourism should be given more consideration as a healthy carrier of foreign currency, which the country desperately needs in order not to have to buy new currency. The Central Bank of Kenya, meanwhile, has imposed a cap on dollar 'forex' withdrawals: no more than $100,000 can be bought at a time per day.
Ruto is also thinking of starting to hand over some state facilities, starting with the ports of Mombasa and Lamu. This would be a real U-turn, after one of his 'crusades' in the election campaign had been against Kenyatta, guilty of having planned, according to him, precisely to hand over the port of Mombasa and its strategic areas to a Dubai company.
Finally, the opposition: yesterday leader Raila Odinga, now 78 years old, returned to speak and accused the government of not knowing what to do to save the country's economy. But even he, more than criticism, cannot do and does not seem to have a recipe for saving the crisis. Probably because at this moment, it does not exist.
From today petrol, diesel and paraffin cost more in Kenya.
The World Economics Journal recently considered the devaluation of the Kenyan Shilling and considered that the currency of Kenya will remain at low values, compared to the dollar and euro, for at least 4 months.
Good news for motorists and transportation in Kenya.
The price of gas has fallen below 100 shillings per liter (just under one euro).
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