IMF offers Kenya expertise to seal graft loopholes, woo Gen Z

The International Monetary Fund (IMF) has advised the Kenya Kwanza government to address corruption to regain the trust of Gen Z, who are skeptical about tax increases and their intended public benefits.  

The call comes in the wake of violent anti-tax protests in June predominantly led by the youth. 

In a briefing held in Washington DC on Friday, IMF officials also revealed they would send experts in public finance management and anti-corruption to help the President William Ruto administration audit its legal framework and close existing corruption loopholes.  

The move signals a fresh revamp in the war on graft by the Kenya Kwanza administration.  

This initiative is part of the IMF’s governance diagnostics programme aimed at improving governance practices. 

Director of IMF’s African Department Abebe Aemro Selassie stressed the need for enhanced transparency in the use of public resources by the Ruto government. 

IMF earlier confirmed that governance concerns had delayed the disbursement of funds to Kenya under its financial programme. 

Mr Abebe also highlighted the importance of communication, stating: “People’s willingness to pay more taxes is closely linked to the assurance that those resources are used effectively and transparently.”

He urged the government to demonstrate how public funds are utilised. 

“You know, I think the (Kenya) government has been out to explain, to say that better effort could have been done to explain why it is that -- that particular taxes, particular reforms are being pursued.  That’s the point that -- we’re noting -- on communication.  Second, also, I think there’s a lot of questions remain about how well, how efficiently and effectively government resources are being used,” said Mr Abebe. 

“Our experience, and I think this is also common sense, is that government, you know, people’s willingness to pay more taxes is directly correlated to assurances that the resources are being used effectively and transparently.  So, I think promoting transparency, showing to what purpose government resources are being used in a -- in a much more effective way than has been the case -- would help in the long run effort to generate tax revenue,” he added. 

The anti-tax protests in June were triggered by the passage of the Finance Bill, 2024, which many citizens viewed as punitive.

Demonstrators stormed Parliament, leading to violence that resulted in police shootings of several protesters.

The unrest forced President Ruto to withdraw the Bill, which aimed to raise an additional Sh346 billion for the 2024-25 budget. 

The controversial tax proposals were part of IMF conditions to reduce Kenya’s reliance on borrowing amid a growing debt crisis.

Following the protests, President Ruto made several concessions, including dismissing most of his Cabinet and forming a broader coalition, including opposition figures. 

The IMF indicated that effective communication and transparency could have mitigated the protests. Ruto acknowledged shortcomings in his administration’s messaging regarding revenue measures, admitting:  “We did not explain ourselves better.” 

In a bid to access IMF funds, the government has initiated a comprehensive corruption audit across all ministries.

Prime Cabinet Secretary Musalia Mudavadi confirmed the launch, emphasising the government’s commitment to combating graft and protecting the economy. 

The Kenya Revenue Authority (KRA) recently warned of low tax morale as a significant barrier to meeting revenue targets, posing challenges to Ruto’s campaign promises and increasing public debt. Many citizens feel disconnected from the benefits of taxation, contributing to a culture of tax evasion. 

Human rights watchdogs previously called for greater accountability in public fund management, framing it as a human rights issue. 

The organisation urged the IMF to ensure its support aligns with human rights principles, emphasising the need to prevent corruption from diverting funds meant to benefit ordinary citizens.