Counting the costs of Finance Bill turmoil

Numerous protesters have died in riots sparked by a government drive to substantially raise taxes. Legalbrief reports that the tax changes contained in the government's funding Bill for the 2024/25 fiscal year were the latest effort by President William Ruto's administration to boost revenue and reduce borrowing. After the announcement of the vote on Tuesday, crowds stormed the Parliament complex and a fire broke out in clashes unprecedented in the history of the country since its independence from Britain in 1963. Human Rights Watch (HRW) on Saturday said at least 30 people were killed. ‘Kenyan security forces shot directly into crowds of protesters on 25 June 2024, including protesters who were fleeing,’ the organisation said in a statement. News24 reports that the protests led to the withdrawal of the Finance Bill by Ruto's administration. ‘Shooting directly into crowds without justification, including as protesters try to flee, is completely unacceptable under Kenyan and international law,’ said Otsieno Namwaya, associate Africa director at Human Rights Watch.

The Kenyan High Court approved the use of military force to restore order after the anti-tax protests overwhelmed police. BBC News reports that the court said that the military deployment was critical to protect government installations, but gave the authorities two days to clarify how long the deployment would last, along with its rules of engagement. ‘To deploy the military in a blanket manner without defining their scope of operation and the duration of their operation is a dangerous trend that can bring about militarisation of the country,’ ruled Justice Lawrence Mugambi. The Law Society of Kenya – which had petitioned the court to order the army back to the barracks – said it ‘respects but disagrees’ with the ruling.

Isaac Mwaura, the government spokesman, said the withdrawal of the Bill was a ‘huge blow to the government as it left a ‘big hole’ in the budget. ‘It is really a big setback,’ Mwaura said, blaming ‘misinformed’ Kenyans for opposing it. The BBC News report says the Finance Bill was aimed at raising taxes to help relieve the country's debt burdens, as demanded by lenders including the International Monetary Fund. Many protesters have been angered by reports of arbitrary abductions of protesters and the killing of at least 23 people. Some are now calling on the President to step down. The state-funded Kenya National Human Rights Commission said it had helped secure the release of more than 300 people who had been ‘illegally detained’. But Mwaura denied this, saying ‘criminal elements who wanted a coup d'etat’ had tried to take advantage of the peaceful protests. 

Kenya’s police watchdog is investigating allegations that officers shot dead protesters during last week’s demonstrations in Nairobi. There were reports of another, even more brutal incident – an alleged massacre of civilians in Githurai, a residential suburb 14km north-east of the capital. When protesters returned to the CBD on Thursday, many spoke of the alleged massacre in Githurai as a reason. But a BBC News investigation has found no evidence of mass killings in Githurai – raising questions about how readily misinformation can spread during a crisis. Communications were patchy on Tuesday evening, with Internet outages across Kenya and mobile phone signals periodically going down. But as news of events in Githurai emerged, some videos did make their way to social media. BBC Verify has managed to authenticate several videos posted by six different online users and from different locations around the area. They show evidence of heavy and continuous gunfire in Githurai, around the main roundabout on the Thika Highway. However, it is yet to come across any verifiable video or image of people killed around that time.

Moody’s Investors Service has sounded the alarm over the heightened political and social risks threatening to undermine the government’s capacity to implement fiscal consolidation. The Mail & Guardian reports that the ratings agency said the proposed tax measures were integral to improving Kenya’s fiscal position. Last month, Moody’s cut Kenya’s senior unsecured debt rating, as well as long-term foreign currency and local currency issuer ratings, to B3 from B2, citing an increase in government liquidity risks. Obligations rated B2 are considered speculative and are subject to high credit risk while a downgrade to B3 means that there is financial instability and it reflects a weaker than expected operating performance. ‘Even if the government offsets the measures’ removal with lower spending, the protests and subsequent reversal of tax increases reduce the scope to broaden the tax base and are likely to slow fiscal consolidation,’ the Moodys said in a note.