That the William Ruto government inherited a badly damaged economy is not in doubt. What is in contest is the amount of pain the people can endure as efforts to turn around the economy take shape.
Three quick positively impactful measures the new government undertook to stop further haemorrhage were: Checking expensive borrowing, stimulating production and aligning the budget to priority areas; as a result shedding off around Sh300 billion tax burden.
However, fiscal indiscipline, a bloated government and predatory deduction measures remain a hindrance to the immediate wananchi's need of having money in their pockets to boost their purchasing power.
The price of common commodities has remained stubbornly high, thanks in part to runaway inflation and other macroeconomic factors. But without a stimulus package, the economy is left to the vagaries of unpredictable externalities.
This year alone, the government has implemented the new enhanced NSSF and NHIF rates to boost the safety nets for the sick, vulnerable and the old. But the uproar that has greeted a planned three per cent affordable housing project deduction from employers and employees means there's need to relook the doses people can take to resuscitate an economy in comatose.
Some proposals may look good on paper but politically suicidal if not untenable in the short run. Additionally, there's need to recalibrate the demand and supply imperatives to leverage the project's labour intensity side while being cognisant of its capital intensity.
The legal frameworks for both the deductions and identification of potential beneficiaries might also turn into legal landmines rekindling echoes from past such schemes that got bungled and mired in wanton corruption and cronyism, to say the least.
One would have imagined that a lesser painful option of PPP would suffice under the circumstances. The model, though having had its share of challenges in the past due to our corrupt nature, remains a viable option in addressing the housing deficit. We only need to address the mistakes and challenges experienced in the past beforehand.
The government also needs to have a robust engagement with the various stakeholders to have their buy-ins and explain the many taxes the President alluded to as having been removed. With that, it won't be difficult to strike a give-and-take consensus.
Economic and political analyst.
