African IMF & Loan Indebted Governments Can't Overtax Citizens You're Creating a Recipe for Anarchy

Tuesday, May 30 2023

By: TB Obwoge

I was casually checking on a friend in Kenya, he's been encouraging me, begging me actually, to return to the country I left in 2020. I've been telling him I would but watching the news of the economic issues in Kenya is very worrisome.

His encouragements have dropped as he doesn't see a way to continue to stay afloat in the country, while feeding his family of 4, 5 if he includes his younger sister.

As with every country the Covid-19 pandemic has had a ripple effect on the prices as well as the supply chain. Everything costs so much more than it used to these days.

Some countries have been hit worse than others, as World Bank issued a list of the countries with the highest food prices in the world. There most recent outlook claims food prices are the highest they've ever been in 5 decades.

African countries that have received approval for IMF bailouts have started rolling out fresh tax bills, they've hit some citizens hard.

People who are already some of the lowest paid in the world, are now being taxed on everything.

Cameroon: The International Monetary Fund (IMF) Executive Board on the 8th of March, 2023, completed the third review of the three-year arrangements under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) with Cameroon, which were approved on July 29, 2021 for SDR 483 million (approximately US$689.5 million, or 175 percent of quota). This would enable the release of SDR 55.2 million (about US$73 million), increasing the total amount disbursed under the agreements to SDR 317.4 million (approximately US$420 million).

Côte d’Ivoire: On May 24, 2023, the International Monetary Fund (IMF) Executive Board approved 40-month arrangements for Côte d'Ivoire under the Extended Fund Facility (EFF) and the Extended Credit Facility (ECF) in the amount of SDR 2,601.6 million (equivalent to 400 percent of quota or approximately US$3.5 billion).

Ghana: On May 17th, 2023, the International Monetary Fund (IMF) Executive Board authorized a 36-month arrangement under the Extended Credit Facility (ECF) in the amount of SDR 2.242 billion (about US$3 billion, or 304 percent of quota). The Executive Board's resolution would allow for an immediate payout to Ghana in the amount of SDR 451.4 million (about US$600 million).

Central African Republic: The International Monetary Fund (IMF) Executive Board, on April 27, 2023, authorized a 38-month Extended Credit Facility (ECF) agreement with the Central African Republic for SDR 141.68 million (about US$191.4 million). The Executive Board's resolution allows for an immediate release of SDR 11.3 million (about US$15.2 million).

South Sudan: The International Monetary Fund (IMF) Executive Board approved a disbursement of SDR 86.1 million (approximately US$114.8 million) under the Food Shock Window of the Rapid Credit Facility (RCF) on March 1, 2023, to assist South Sudan with the urgent balance of payment needs resulting from heightened food insecurity.

Kenya has yet to finalize their IMF loan agreement, Kenyan media outlets said they've been approved for the funds increase, yet the government hadn't completed signing the deal.

Prior to the news though President William Ruto had already started creating more ways to tax the poorly paid Kenyan citizens. His crushing taxes even extend to those Kenyans living abroad.

With little to no services from their government, Kenyans living outside the country are expected to carry the country's debt on their backs. All while supporting their families in Kenya.

Diaspora remittances dropped in February compared to January 2023. Those who sent money home from abroad only managed KSh 39.3 billion in the month.

In another Tweet posted to Twitter;

The amount of money sent by Kenyans living abroad back to their families and friends in Kenya for the three months to March this year dropped for the first time in 13 years according to the latest stats released by the Central Bank of Kenya.

The Kenya opposition party Azimio plans to restart public demos (protests) of the economic crisis facing millions of Kenyans this week. The Kenya police have issued a statement about these demonstrations.

These same crushing new taxes are weighing heavy on Ghanians as well. Who are less likely to go out to the streets and protests.

African governments are taxing utilities, mobile money transactions, which shouldn't be taxed, on money that has already been taxed.

Punishing those for using mobile money, which is a much better alternative to using cash which spreads germs and keeps bills available when needed.

Increasing taxes without raising wages is going to lead to an explosion. If people can't afford to pay their bills or have enough money for a basic meal for themselves & their families, they're going to snap.

Fear, coupled with inequality in wages mixed with hunger will create something that no government wants to see happen. How much can people take?

Police and protesters clashed in Nairobi, during protests over the high cost of living and claims of cheating in last year’s election despite the demonstrations having been banned.

About two dozen people were arrested, including two opposition MPs, during the unrest.

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©️TB Obwoge 2023 All Rights Reserved