Kenya: Controversial fuel tax implemented September 1 /update 1

Event

Kenya's government implemented an unpopular 16 percent tax on fuel products on Saturday, September 1, prompting protests and strikes on Monday, September 3. An indefinite strike launched on Monday by the Kenya Independent Petroleum Dealers Association saw workers stop transporting fuel supplies from depots to gas stations; associated transportation disruptions were also reported when truck drivers participating in the strike blocked access to Nairobi's main fuel depot. In addition, some matatu buses in Mombasa reportedly went on strike to protest the price increase, stranding commuters. The fuel tax is expected to have widespread knock-on effects, including raising the cost of public transportation, electricity, and basic commodities. Additional demonstrations and strike actions are likely in the near-term.

Context

The tax increase comes as a result of International Monetary Fund (IMF) advice to shore up Kenya's budget deficit. The increase is expected to raise USD 700 Million and cut the budget deficit from 7.2 percent to 5.7 percent of GDP.

The new Value Added Tax (VAT) was first approved in 2013, though it has been delayed by parliament several times. The government implemented the change despite an August vote by lawmakers to further postpone the VAT another two years; opponents to the tax say that it will hurt Kenya's economy. Several opposition lawmakers have threatened impeachment of Kenya's Finance Minister over the issue.

Advice

Individuals in Kenya are advised to monitor developments to the situation, anticipate transportation disruptions (including possible fuel shortages), and avoid any potential protests.