Kenya’s Gen Z-led protests of 2024 drew global headlines. For weeks, young people mobilised against proposed tax increases, the rising cost of living, unemployment, corruption and what they saw as an unresponsive political class. But what began as opposition to the 2024 Finance Bill quickly evolved into a broader challenge to the way the country was being governed.
The protests were remarkable for their scale, decentralised nature and ability to mobilise through social media. They were eventually subdued through political concessions and state repression. At least 63 people were killed.
The issues that drove the protests haven’t disappeared. Questions about taxation, unemployment, public spending and inequality remain central to Kenya’s political debate. XN Iraki, an economist who has researched and taught in Kenya and beyond for more than two decades, explores the challenges.
What has changed in the government’s approach to taxation and spending?
Economic policymaking in Kenya has become more politically constrained. The government can no longer assume that tax measures will be accepted.
As a result, the government has become much more cautious when it comes to tax policy.
The government is far more careful about introducing new taxes or increasing existing ones. Several proposed tax measures have been dropped or watered down, reflecting a greater sensitivity to the political risks of being seen to increase the cost of living. These include a 16% rise in the price of electric bikes resulting from new taxation.
Instead, policymakers have pursued two alternative approaches.
The first has been to widen the tax base, particularly by targeting Kenya’s vast informal sector, which accounts for 8 in 10 jobs (over 18 million employees).
Government officials argue that the tax burden is currently carried by registered taxpayers (only 40% out of 22 million taxpayers), and that everyone should contribute.
But taxing the informal economy remains difficult because many businesses in this sector operate without formal records and survive on thin margins. Small traders are already struggling to make ends meet.
The second approach has been a gradual shift from direct taxes towards levies, fees and charges on services. These include digital payment charges. They are often less politically controversial, but they still raise the cost of doing business. In turn, higher costs can make Kenyan goods and services less competitive and place pressure on consumers.
The protests have also influenced spending priorities. The last two national budgets have included more programmes targeting young people, including internships, enterprise support and procurement opportunities reserved for youth. Yet youth unemployment remains high, at about 67% (ages 15-34). This suggests the scale of the challenge exceeds the resources being devoted to it.
The biggest fiscal consequence has been on borrowing. There are still budget deficits, so borrowing bridge the gap. Recent budgets have relied increasingly on domestic borrowing to finance spending. Domestic borrowing refers to money the government raises from Kenyan investors through the sale of treasury bills and bonds. Kenya also borrows from international lenders, which is often cheaper but carries exchange-rate risks as repayments are made in foreign currencies.
In the 2026-27 budget, 90% of a Sh1.2 trillion (US$9.3 billion) deficit will be borrowed locally. In the 2023-24 financial year, domestic borrowing was 70%.
Domestic borrowing may be politically easier than raising taxes. But it raises concerns about the “crowding out” effect. This happens when government borrowing absorbs funds from lenders, such as banks, that might otherwise have been available for private sector investments and job creation.
What have been the key implications for the economy?
A major concern is that government spending has remained high. Many Kenyans expected the protests to trigger a serious effort to reduce waste and lower spending. That is work in progress.
Two spending items stand out. The first is the public wage bill, which absorbs a significant share of tax revenues. In theory, technology and digitisation should make the government leaner and more efficient. In practice, reducing public sector employment carries political risks, particularly given Kenya’s high unemployment rate.
The second is debt servicing. Kenya spends a large portion of its revenue repaying loans. This leaves less money available for development projects and public services. It creates a vicious cycle. High spending leads to more borrowing, which in turn requires higher future taxes or further borrowing.
The government is caught between competing pressures.
Citizens want lower taxes and a lower cost of living. The state needs revenue to fund services and repay debt. And politicians are reluctant to cut spending ahead of the 2027 general election.
What are the policy hits and misses?
The biggest policy success has been the government’s recognition that young people need to be more deliberately included in economic policy. Recent budgets have expanded funding for youth empowerment programmes.
The misses, however, are more significant.
One is the attempt to expand taxation into parts of the digital and gig economy, where many young Kenyans have sought opportunities. Taxing these sectors risks discouraging innovation and entrepreneurship.
Another is the gap between expectations and delivery. The government’s promise to create overseas employment opportunities for young people has generated publicity, but the numbers remain small relative to the scale of youth unemployment.
Perhaps the most important policy failure is that young people are still viewed primarily as a political challenge rather than an economic opportunity or asset.
Around the world, countries are grappling with ageing populations and shrinking workforces. Kenya has the opposite advantage: a large, educated and technologically savvy young population. Yet corruption and limited economic opportunities mean many young people feel their talents are undervalued and underutilised. This can create frustration.
What economic issues might mobilise young people again?
The issues that brought young people onto the streets in 2024 have not disappeared.
Youth unemployment remains high. Slower economic growth intensifies these frustrations.
Corruption remains another powerful mobilising issue. Many young Kenyans believe public resources are still being mismanaged while essential services remain inadequate.
As Kenya approaches the 2027 elections, the greatest risk for policymakers is assuming that the protests were solely about the Finance Bill. The bill was merely the trigger. The deeper concerns – jobs, corruption, inequality, accountability and economic opportunity – remain largely unresolved. Those issues are likely to continue shaping political mobilisation, even beyond 2027.
