There's growing disconnect between government, people on economy

Over the last week, Kenyans have once again been confronted by the harsh reality of a struggling economy. Demonstrations over fuel prices, matatu fares rising by nearly 50 per cent, and electricity costs increasing by close to Sh4 per kWh have placed enormous pressure on ordinary citizens already battling a high cost of living.

At the centre of this storm lies one major issue: Rising fuel prices and the government’s continued unwillingness to significantly reduce taxes and levies imposed on fuel. But the real conversation goes far beyond the price at the pump. What Kenya is witnessing today is the growing disconnect between government economic policy and the everyday reality of ordinary people.

Fuel is not just another commodity. It is the foundation upon which transport, manufacturing, agriculture, electricity, supply chains, and processing industries operate. The moment fuel prices rise, the ripple effect spreads through every sector of the economy almost immediately. 

Transport operators increase fares to survive. Manufacturers increase production costs. Suppliers raise logistics charges. Retailers push prices upward. Electricity costs become more expensive. Food prices rise.

In the end, it is the ordinary consumer who absorbs every single layer of these increased costs. Yet one critical reality remains unchanged: The salaries and working conditions of ordinary Kenyans have not improved alongside these rising prices. Their incomes remain largely stagnant while the cost of survival continues climbing month after month. 

Basic human needs have not changed. People still need food. Parents still need to pay school fees. Families still need transport. Households still need electricity and healthcare. But what changes is affordability.

As prices continue rising, ordinary Kenyans slowly begin cutting off parts of their lives in order to survive. Parents delay or fail to clear school fees on time. Families shift from balanced diets to cheaper and less nutritious food. More people choose to walk rather than use public transport. Plans that once represented progress and stability — insurance cover, construction projects, purchasing personal vehicles, or expanding small businesses — are postponed indefinitely as households adjust to a harsher economic reality.

This is the true face of inflation at the micro-economic level. It is not merely about statistics released in reports or percentages announced during press briefings. It is about shrinking household purchasing power and declining quality of life.

Ironically, while citizens experience this economic pain directly, government indicators often reflect the opposite. Rising fuel prices translate into increased tax collections. Higher costs generate larger VAT revenues. Budget ceilings continue expanding. Revenue targets rise.

From a macroeconomic perspective, the numbers may appear strong. But beneath those numbers, the local economy is weakening. And this is where the disconnect becomes dangerous.

An economy cannot sustainably grow when the consumer base financing it is steadily losing purchasing power. Microeconomics — the ability of households, workers, and small businesses to spend, invest, save, and expand — is what ultimately builds the local economy and strengthens the tax base over time.

Unfortunately, government focus appears increasingly tilted toward macroeconomic visibility rather than grassroots economic stability. The conversation revolves around roads, stadiums, mega infrastructure projects, and affordable housing programmes. These projects are politically visible and economically significant in the long term. However, they do little to immediately cushion a struggling household facing daily increases in transport, food, electricity, and rent.

At the same time, another silent pressure continues growing within the economy: Domestic borrowing. With the government borrowing more than 65 per cent of its debt locally, ordinary investors and SMEs are increasingly being squeezed out of access to affordable credit. 

The result is predictable. Small businesses struggle to expand. Entrepreneurs delay investments. Private sector growth slows down. Job creation weakens.

This is why the current economic frustration among Kenyans cannot simply be dismissed as temporary public anger over fuel prices. What people are reacting to is the feeling that policy decisions are increasingly detached from lived economic realities.