Having spent time in conversations with economists, policymakers, business owners, and everyday Kenyans, I have gathered a wealth of insights into the country’s economic direction.
There is no denying that the recent decisions by the Central Bank of Kenya, particularly the lowering of interest rates, have sent ripples across the financial sector.
The decision to cut the main interest rate to 10.75 per cent is not just about numbers; it is about making credit more accessible, giving businesses room to breathe, and setting the economy on a path towards recovery.
The logic is simple — when borrowing becomes cheaper, more people and companies are encouraged to take loans, invest in businesses, and expand their operations.
The hope is that this, in turn, fuels economic growth.
This move is particularly crucial at a time when many Kenyans have been grappling with high costs of living, sluggish business growth, and a challenging economic climate.
Lowering interest rates is expected to trigger increased economic activity, allowing businesses to grow and creating more job opportunities.
However, while this move is beneficial in the short term, the long-term success will depend on how well banks respond and whether they will indeed pass on the lower rates to borrowers.
Many lenders have traditionally been reluctant to reduce loan costs, citing risks of default, and it remains to be seen whether this time will be any different.
Beyond monetary policy, the country’s fiscal situation has also seen major adjustments.
Since President William Ruto took office, the National Treasury has been actively implementing reforms aimed at improving revenue collection, managing public expenditure, and reducing overreliance on borrowing.
A critical aspect of this has been tax reforms, which have seen the government widen the tax base and introduce new levies.
While some of these taxes have been met with resistance, the reality is that Kenya cannot sustain itself on debt indefinitely. Increasing revenue through taxes is a necessity if the country is to finance its own development without accumulating more loans that weigh heavily on future generations.
Kenyans complained about the rising national debt, especially as Uhuru’s term was coming to an end, and Ruto pledged to reverse the situation when he took office.
The Treasury has also made significant changes in how public funds are managed.
The introduction of the Treasury Single Account system has brought more transparency, ensuring that funds are better accounted for and reducing inefficiencies that have previously led to waste and mismanagement.
At the county level, the government has increased allocations, allowing for better services at the grassroots.
The idea is to empower local governments to undertake development projects without constant reliance on the national government.
One of the biggest concerns for Kenyans over the past few years has been the cost of living.
There is finally some relief on this front. Food prices, particularly maize flour, have come down significantly, providing much-needed respite for households.
At one point, a 2kg packet of maize flour was selling at more than Sh200, but in recent months, prices have fallen to less than Sh100 in some areas.
This is a direct result of improved agricultural output, which the government has supported through fertiliser subsidies and other farming incentives.
The challenge now is to sustain this downward trend and prevent price shocks in the future. While the government has taken positive steps to stabilise the economy, there are concerns that need careful handling.
One issue is the ongoing privatisation agenda, which has hit legal roadblocks.
There were plans to privatise several state corporations to improve efficiency and generate revenue, but these have been held up because courts have temporarily halted progress.
The administration faces the delicate task of balancing economic reform with the public trust and legal constraints on borrowing. Another critical factor is the question of external aid.
Kenya has long benefited from foreign assistance, particularly from Western nations, but there are signs this cannot be relied upon indefinitely.
The United States, for example, has recently cut back on some forms of aid, citing shifting priorities. While such reductions may not have an immediate catastrophic effect, they are a warning sign that Kenya must stand on its own feet.
The best way to prepare for this is by strengthening internal revenue streams and ensuring government expenditure is well managed.
There is no escaping the reality that Kenyans must contribute their fair share in taxes if the country is to be fi nancially independent.
Treasury officials, including Treasury PS Dr Chris Kiptoo, have reiterated the importance of tax compliance, urging businesses and individuals to meet their obligations.
Paying taxes may not be a pleasant duty, but it is the price to pay for development.
With improved revenue, the government can invest in infrastructure, healthcare, education, and other crucial sectors that directly impact citizens’ daily lives.
Looking ahead, the country’s economic trajectory will depend on how well these reforms are sustained.
Lower interest rates create the potential for business expansion, but only if banks extend affordable credit to borrowers.
The cost of living has shown signs of easing, but continued investment in agriculture and manufacturing is needed to maintain stability.
Revenue collection has improved, but it must be handled prudently to avoid unnecessary burdens on citizens.
Kenya is at a critical juncture.
The policies being implemented now will determine the financial health of the country for years to come.
If managed well, the economy can become more resilient, self-reliant, and capable of standing strong without excessive debt or dependence on foreign aid.
It is a delicate balancing act, but one that must be pursued with determination and focus. Only then can Kenyans truly enjoy economic stability and prosperity in the long run.
