NAIROBI (Xinhua) --
Kenyans are preparing for tougher times starting
next month when the government’s new tax measures on fuel take
imposed a 16 percent value added tax on all fuels, a move that
is expected to increase prices of diesel, super petrol and
A liter of petrol,
according to the Energy Regulatory Commission, would now cost at
least 1.3 U.S. dollars in the capital Nairobi and 1.4 dollars in
upcountry towns. A liter of petrol currently in Nairobi goes for
The raise on fuel
prices is expected to have a spiral effect on the cost of other
basic commodities, pushing their prices up.
The tax measures are
on the back of a push by the International Monetary Fund (IMF)
to enable the governments raise more revenue to curb mounting
debt following increased domestic and external borrowing.
The measure was
among the conditions given to Kenya by IMF in 2015 when it
offered the East African country 1.5 billion dollars standby
The fuel price hike,
therefore, sets up the East African nation’s residents to higher
Goods and services
whose prices are set to rise include electricity, transport, all
manufactured products like milk, bread and cooking fat, and all
“This is not good
news to us. We are already struggling to fend for ourselves as
things stand now. Any price increase would therefore put us in a
squeeze,” Moses Wachira, who runs a clothes stall in Nairobi,
Wachira noted that
business has been low for the past two months, a situation that
has seen him make little profit and thus struggle to pay his
“Most of us are
struggling, life is tougher. If it is going to be tougher than
this starting next month, I wonder what majority of citizens
would do,” he said.
The worst to be hit
by price increases will be the low and middle income earners,
who make the bulk of the East African nation’s population.
The Kenya National
Bureau of Statistics classifies low income earners as those who
earn between 100 dollars to 236 dollars per month.
On the other hand,
Kenyans earning between 236 dollars and 1,199 dollars a month
belong to the middle income band. A majority of the low income
earners engage in small businesses and live on less than a
dollar a day.
equally feel a greater pinch as fare prices will rise. Matatu
Welfare Association, which represents public transport vehicles,
said they would raise fares by between 0.10 dollars and 0.30
Prices of most
commodities currently are relatively low, with Kenyans buying
most commodities affordably, a situation that has helped to keep
inflation below 5 percent.
Henry Wandera, an
economics lecturer in Nairobi, said inflation would certainly
rise and would even double.
In the agriculture
sector, he noted, fuel constitutes 30 percent of the costs. “An
increase in fuel prices certainly leads to a rise in food prices
and this in turn pushes up inflation,” he said.
He added most
manufacturers use diesel and electricity in their operations and
thus would pass the cost to consumers.