How Can Kenya's Economy Be Compared? Under 2 Former Presidents

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Kenya’s economy is worse off today compared to the economy’s well-being during former president Mwai Kibaki’s tenure, according to the latest prosperity index.

Kenya’s Economy has been pulled down by mounting public debts and reduced savings among its workforce plagued by job cuts, and stagnant wages in a business environment where companies have ushered in outstretched measures to protect profits.

This has in turn hurt cash flow, translating to lower demands of goods in cooperate Kenya and reduced savings, which is captured by bank accounts having more than Ksh 100,000 dropping for the first time in 13 years.

Former presidents Uhuru Kenyatta and Mwai Kibaki’s regimes had a very different ratio in Kenya’s tax to Gross Domestic Product(GDP).

Tax to GDP ratio represents the size of a country’s tax kitty relative to its GDP, the marketing value of its goods and services made within a country during a specific period.

A comparison between Uhuru Kenyatta and Mwai Kibaki’s tenures in the past years did not see a consistent uptick in tax to GDP ratio.

In the seven years toward the end of former president Mwai Kibaki’s term, the increase in tax revenue largely kept up with the economy’s growth. Kibaki’s tenure saw tax to GDP ratio maintained at 22% to 23.1% between 2007 and 2013. In Kenyatta’s tenure, the carve fell with tax to GDP declining from 20.1% to 14% by the year 2020.

How does tax to GDP ratio affect the economy’s ability?

The higher the tax-to-GDP ratio, the better the financial position the country will be in. The ratio represents that the government is able to finance its expenditure. A higher tax-to-GDP ratio means that the government is able to cast its fiscal net wide and reduce its dependence on borrowing. As of June 2020, Kenya’s debt stood at 6 trillion, with half of it from external lenders.

On the other hand, a lower tax-to-GDP ratio constrains the government to spend on infrastructure and puts pressure on the government to meet its fiscal deficit targets.

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Mwai Kibaki ‘The economist’;

Between 2003 and December 2013, Mwai Kibaki grew the size of Kenya’s economy from just over Ksh. 1trillion to Ksh. 6.4 trillion, to leave behind an economy five times larger than that he found when taking office.

Gross Domestic Product (GDP) grew by a mean of 5.6% across the decade despite headwinds, including the 2007/08 post-election violence which saw growth slack to 1.5%, the lowest rate in Kibaki’s administration.

In 2010, Kibaki oversaw a 10% GDP growth, the highest level of growth in Kenya’s economy since the turn of the 21st century and a figure yet to be achieved.

Mwai Kibaki The economist is not just a term created in newsrooms but a common description of the departed president in many socio-economic and even political circles across the board.

For a man almost singlehandedly credited for lifting the Kenyan economy from the rubble, Kibaki’s legacy is clearly carved out by his economic advancement over his ten-year tenure.

Uhuru Kenyatta’s name in the economy’s downgrade.

After Uhuru Kenyatta ascended to power in 2013, Kenya’s economy worsened. During his regime, alongside his then deputy William Ruto, the country’s performance on job creation was weak, with unemployment rates worsening by 2.93% in points from 2.81% in 2013 to 5.74% in 2021. Weak job creation is explained by the not-so-robust economy.

Between 2013 to 2021, Kenya’s economic (Kenya’s Economy) growth (GDP) averaged 4.4% while tax revenues stagnated at approximately 14.8% of GDP.

Uhuru and Ruto’s most prominent legacy is runaway public debt, whose growth has not been commensurate with economic performances. Kenya’s Economy suffered a blow under the duo’s leadership.

Read: Uhuru Kenyatta’s economic legacy: big on Promises, but Weak on Delivery

When Uhuru and Ruto took office in March 2013, Kenya’s public date stood at about Ksh. 1.8 trillion of which about 45% was externally sourced. Nine years later (by March 2022), the stock of public debt had grown by 343% at almost Ksh. 8trillion. Just over 50% was due to external borrowing.