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Home Economy

Opinion: Austerity wrong medicine for Kenya’s economy.

Brian Otieno by Brian Otieno
June 16, 2025
in Economy, Opinion
Reading Time: 2 mins read

In reflecting on the global economic developments of recent decades, I am more than convinced that Kenya must chart a different course, one that avoids the traps set by rigid economic doctrines set by institutions like the IMF and instead prioritizes the well-being of its people. Across the world, we have seen how certain economic strategies, particularly those tied to austerity and neoliberal reforms, have caused deep social and economic harm.  For instance, after the 2008 global financial crisis, countries like Portugal, Spain and Greece adopted strict austerity measures in exchange for IMF and EU bailout packages. The impact? Grave!  Public sector wages and pensions were slashed, taxes were raised, and public services were cut. Leading to a deep recession increase in unemployment rates and a rise in poverty and inequality.

One of the clearest lessons for Kenya is the danger of austerity policies. Countries that drastically cut public spending and reduced their welfare systems ended up with prolonged recessions, high unemployment, and increased inequality, outcomes that Kenya can’t afford. At a time when we are still grappling with poverty and unemployment. Slashing public investment would be a mistake. We must instead focus on strengthening these sectors as the foundation for long term development.

It’s also important to recognize that economic policies are not purely technical as they are deeply political. Many of the crises we’ve seen around the world stemmed from policy choices that prioritized budget targets over people. In Kenya, we need to move away from the habit of accepting policies as if they were non-negotiable mandates handed down from heaven (read abroad). Our leaders must take full ownership of our economic direction and ensure that it reflects the priorities of Kenyan citizens, not just those of creditors or international institutions.

Moreover, there are successful alternatives we can draw inspiration from.  We can take a different approach to development, strategically protecting our industries, investing heavily in relevant public infrastructure, and expanding social programs. Look at models that were employed by China, Vietnam and South Korea that sustained high growth rates, significantly reduced poverty , and  created competitive export sector. Another example is Brazil under Lula da Silva, where there was significant reduction in inequality and poverty, along with strong economic growth during the early 2000s, thanks to cash transfer programs, raised minimum wages, and investment in public services. Such models when backed with the right vision and political will, will make it possible to grow the economy while improving lives.

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Transparency and accountability are also essential. Our engagements with global financial institutions such as World bank and IMF must be open to public scrutiny. We, the citizens deserve to know the terms of any agreements made on our behalf. We must push for participatory decision-making processes that involve not just technocrats, but the public.

In short, the path to prosperity is not paved with budget cuts and rigid market reforms. We need to foster homegrown thinking, economic strategies that are rooted in our own realities and aspirations. It’s time we trusted our capacity to develop solutions without relying on solutions engineered abroad!

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