Higher fuel prices in Kenya split low-income families

The implementation of punitive tax measures has brought out the other side of Kenyans that we have never seen before.

Kenyans are united in protest – everyone is pretty livid about the high taxes but while a few are outspoken against it, a silent majority lives in utter desolation.

I travelled to Mukuru Kwa Njenga to interview some of the people who have been hit the hardest – those at the bottom of the pyramid – and although they are silent, their stories are heartrending.

Meet John and Job (not their real names). They share a single room with two other colleagues from work and pay Sh4,000 monthly rent for the eight-by-eight-feet tin-walled shack.

This is their home between Sunday night and Friday evening. From here, they walk to and from work.

Friday evening, they travel home to see their respective families in Ongata Rongai, where they live on a piece of land they bought through a cooperative.

As the fuel prices increased, and with no concomitant increase in income, they reduced their visits home. In fact, they were separated from the family in order to meet expenses.

They tell me that the newest increase in fuel prices now threaten to completely separate their families, as they cannot afford to travel anymore unless they trek home.
As I spoke to John, Job disappeared and showed up a few minutes later with a loaf of bread and a packet of milk.

IMPACT OF VAT

Without asking me if I wanted something to drink, he quickly prepared mixed tea.

Aware of my lactose intolerance, I wanted to refuse Job’s offer to take tea with them but the weight of their generosity though they did not have money to be with their families, forced me to accept the cup of tea and bread.

John intensely watched every small movement I made as he sought to understand the purpose and motives of my visit.

To give him comfort, I switched to talking about the past and reminiscing how tea boiled in a kettle was always sweeter and hotter than the normal 100 degree Celsius.

We laughed. The laughter had a thawing effect on him and he become more relaxed. Eventually he became more open with me and as his roommates joined the discussion, we had become pals.

“I am here to actually find out the impact of this VAT on our folks living in such areas and perhaps give voice to their concerns,” I said.

There was silence before John interjected and asked: “What more do you want to know since you now already know that escalating prices have forced us to live far away from families? “

“If I write about the plight of the poor, perhaps something can be done to improve the situation,” I volunteered.

“Hukuona habari jana (Did you not watch the news yesterday)?” Job asked.

“What was there?” I asked.

“Si tuliambiwa hii ni bei ya mabadiliko (We were told that this is the cost of transformation),” they told me.

“That was an opinion but we can make a good case too,” I responded.

“I thought you understand this country but now I beginning to doubt you," Job interjected.

“All men are not created equal in Kenya and I want you to challenge me on this,” Mathew, who had been quiet all this time, exploded.

NEW ECONOMIC THINKING

I asked him to explain. Quickly, he narrated how senior politicians could carry Sh10 million in a bag to buy goats and not a single soul asks the source of the money.

“Try the same and you will be locked up for money laundering. Try even withdrawing one million shillings from the bank and you realize that some men are more equal than others. What are we supposed to think?” he responded.

It was clear they wanted to discuss macro issues and not the micro aspects of my interest.

“Tuko na hasira sana (We are angry indeed). Hii inchi iko na pesa mingi. Ni matumishi tu ndio mbaya (This country has a lot of money, but how we spend it is the real problem),” Mathew said and before I could say anything, he went on.

“See, the MPs now want the government to buy them four-wheel-drive vehicles in total disregard of our plight and yet we are the ones who elected them,” he lamented further.

I explained that the real purpose of visiting them was to make a case for new economic thinking – inclusive development – popularised in Brazil during its rapid economic transformation.

Economists argued, correctly in my view, that economic growth is not enough if income distribution does not benefit every section of society.

BETTER LIVING STANDARDS

The intentions of governments are to achieve strong growth that will guarantee better living standards and improve our well-being.

But in doing so, the aspect of inclusivity becomes very important so that no one is left behind.

In other words, the benefits of greater material prosperity for a country must be shared evenly among the various social groups.

I took a few minutes to explain this concept in Swahili and they became convinced that I was on their side and that I would advance their cause.

Using my phone I downloaded Elena Ianchovichina and Susanna Lundstrom 2009 paper, "Inclusive Growth Analytics: Framework and Application", and had them read the following paragraph:

Sustainable economic growth requires inclusive growth. Maintaining this is sometimes difficult because economic growth may give rise to negative externalities, such as a rise in corruption, which is a major problem in developing countries. Nonetheless, an emphasis on inclusiveness – especially on equality of opportunity in terms of access to markets, resources, and an unbiased regulatory environment – is an essential ingredient of successful growth. The inclusive growth approach takes a longer-term perspective, as the focus is on productive employment as a means of increasing the incomes of poor and excluded groups and raising their standards of living.

The search for economic growth in Kenya has focused more on economic performance at the expense of the poor, we concluded.

Many civil servants and people working in the jua kali (informal sector) are effectively underemployed and without productive employment suggested by Ianchovichina and Lundstrom paper.

TRANSPORT SUBSIDY

As an immediate measure, the government should consider providing transport subsidy for all workers who have been excluded like John and his roommates.

The subsidy can be managed through emerging technologies that can provide for programmable currency dedicated to transport only.

Such policy measures will instantly reunite families that are separated due to economic hardship.

In the long run, the government must provide incentives to private sector to build a rapid mass transportation system linking peri-urban areas to urban centres and within urban areas to ensure that transportation is affordable by the majority of people that are now disenfranchised.

The World Economic Forum came up with an inclusive development index that every country must pay attention to.

The index is an annual assessment of several countries’ “economic performance that measures how countries perform on eleven dimensions of economic progress in addition to GDP. It has three pillars: growth and development; inclusion and; intergenerational equity – sustainable stewardship of natural and financial resources.”

Inclusive growth is the surest path to sustainable poverty reduction given the fact that it is broad-based across sectors, and promises inclusivity of a large portion of the labour force in any country.

There are far too many angry people suffering in silence and even if the VAT on fuel were to be removed, they will still remain poor until the country begins to think more broadly and adopt inclusive development approaches.

The writer is an associate professor at the University of Nairobi’s School of Business. Twitter: @bantigito