Kenya Is Desperate to Pay Off Staggering Debt. Its Workers Are Paying the Price

The pay stubs tell the story.

For many Kenyan workers, deductions have ballooned: new levies for affordable housing and health insurance, increased contributions to the national pension fund, and a higher overall income tax rate. In a matter of months, salaried employees earning 45,000 Kenyan shillings per month — roughly $350 — saw their take-home pay shrink by nearly 9 percent, to about $262.

“People who are salaried are crying,” said Kennedy Odede, founder of Shining Hope for Communities, or SHOFCO, a nonprofit based in Nairobi’s Kibera neighborhood.

The new taxes are part of President William Ruto’s aggressive push to shore up government revenue and address Kenya’s mounting public debt, which now stands at more than $80 billion. To make up the shortfall, his administration has introduced a raft of measures: excise taxes on sugar, alcohol and plastics; a doubling of the business turnover tax to 3 percent; and hikes of 15 to 20 percent on fees for money transfers and mobile data. A tax on imported goods — including staples like wheat and cooking oil — was raised to 2 percent from 1.5 percent, and some exemptions for retirees were eliminated.

The burden has been particularly heavy for formal wage earners, who constitute a small fraction of Kenya’s labor force — and who, unlike those working in the vast informal economy, cannot easily sidestep the tax man.

“Our buying power has really decreased because of the taxes,” said Elizabeth Okumu, chairwoman of SHOFCO’s urban network. Ms. Okumu, who earns a steady salary, said that six months ago she could purchase flour, sugar, rice and cooking oil for 1,000 shillings. Today, the same amount buys only sugar and flour.

Kenya’s government spends nearly 60 percent of its revenue on debt repayment, crowding out critical investments in healthcare, education, infrastructure and climate resilience. The situation is not unique: across sub-Saharan Africa, many countries now spend more on interest payments than on public services.

To meet International Monetary Fund conditions for a new loan package, Kenya is expected to continue cutting spending and raising revenue. But many citizens say there is little left to give.

“You can’t squeeze much water from a wrung-out towel,” said Mr. Odede.

In a nation where 40 percent of the 52 million people live in poverty and youth unemployment exceeds 25 percent, the options are limited. Subsistence farming and informal work dominate the economy. An estimated 83 percent of Kenya’s labor force works in jobs beyond the reach of tax collectors — as street vendors, hairdressers, domestic workers, or drivers.

That leaves salaried workers shouldering a disproportionate share of the load.

Public frustration has boiled over. Last year, proposed tax hikes sparked mass demonstrations that turned deadly. More than 50 people were killed in Nairobi, and protesters set part of Parliament ablaze. Although the government initially withdrew the proposals, many were reinstated weeks later.

“Ruto says we need to pay our debts, but there are no public services to show for it,” said Tatiana Gicheru, a student at Strathmore University in Nairobi. “I can’t walk into a government hospital and get any services.”

Ms. Gicheru, 21, sat at a Java House café with her friend Jewel Ndung’u, 25, a recent graduate who has been searching in vain for work as a data analyst. Since last fall, Ms. Ndung’u said, she has applied for 73 jobs, received six callbacks and no offers.

“Where is the affordable housing? Where are the health services and the public transportation?” she asked. “Suddenly the system is crumbling.”

Ms. Ndung’u said she would prefer to see Kenyans pay their debts directly — through M-Changa, a digital crowdfunding platform — rather than sending money to the government through taxes and hoping it will be used wisely.

Distrust of the government runs deep. Reports by the auditor general, Nancy Gathungu, have documented a litany of missing funds and procurement failures. At the end of last year, she said the government could not account for more than $1.24 billion allocated for debt payments. In March, she reported that $64 million worth of Covid-19 vaccines had never been delivered.

Critics have also pointed to extravagance among top officials, further fueling public anger.

In Syokimau, a town near Nairobi’s international airport, residents frustrated with flooded, potholed roads forced their county representative to wade through the muddy streets last fall in a public display of protest.

In Kibera — considered Africa’s largest informal settlement — daily life unfolds amid broken infrastructure and government neglect. Streets bustle with residents carrying yellow jerrycans to water taps and dodging motorbikes, refuse and open sewage. Makeshift homes with tin roofs are crisscrossed by illegal electrical hookups.

“There are no government sanitation services here,” said Benedict Musyoka, a youth organizer in Kibera. “You are taxing hard, and we have no jobs.”

One young man, he recalled, recently told him, “I won’t marry.” Supporting even one person, let alone a family, felt impossible — despite having a university degree.

Kenya’s tax-to-GDP ratio was 16.6 percent in 2022, according to the Organization for Economic Cooperation and Development. That figure is typical for the region, but roughly half the level seen in wealthier nations. Many analysts say broadening the tax base — rather than continually squeezing formal workers — is essential.

“There are too many exemptions,” said Thys Louw, a portfolio manager at Ninety One, a global investment firm based in London.

The anniversary of last year’s protests looms in June — the same month the Ruto administration is expected to unveil its next budget. Some fear more unrest is on the horizon.

People like Ms. Okumu are bracing for what’s next. “People work so hard,” she said. “They hope that tomorrow they’ll see the light. But when tomorrow comes, it’s still darkness.”