Employers Sound Alarm as Workers Feel Tax Squeeze

Business leaders are challenging President William Ruto's assertions of a "healing economy" as companies across Kenya continue to announce mass layoffs and grapple with mounting tax pressures.

The Federation of Kenya Employers (FKE) has raised serious concerns about deteriorating employee living standards, pointing to the heavy tax burden as a primary culprit. Workers' purchasing power has significantly declined, prompting urgent calls for a review of current tax policies.

The situation is further complicated by severe cash flow challenges facing businesses. Companies report that delayed government payments are hampering their operations, forcing many to reduce their workforce. Multiple taxation and increased operational costs have pushed several firms to the brink, making workforce retention increasingly difficult.

While President Ruto maintains an optimistic stance, claiming economic improvement and highlighting government stabilization initiatives, the reality on the ground tells a different story. Businesses are struggling with reduced consumer spending as Kenyans tighten their belts amid rising living costs.

The economic narrative has become more complex with Moody's recent revision of Kenya's ratings to 'positive,' citing potential easing of liquidity risks. However, some economists challenge this assessment, questioning the methodology and metrics used to evaluate Kenya's economic performance.

The Treasury's debt strategy could benefit from this rating upgrade, potentially leading to improved borrowing costs and better access to international financial markets. Nevertheless, business leaders argue that immediate action is needed to address the domestic economic challenges, particularly the clearing of pending government bills and reassessment of the tax regime.