Kenyan President William Ruto has received criticisms from South African opposition leader Julius Malema over unfulfilled campaign promises, including a pledge to reduce reliance on the U.S. dollar in pan-African trade.
Malema, the head of South Africa's Economic Freedom Fighters (EFF), made the remarks during the inauguration of the Pan African Institute at Kenya's Lukenya University on Thursday.
"I don't know if President William Ruto means it because he said so many things… I cannot locate him these days because the things he said during elections and the things he is doing now are two different things," said Malema.
Our efforts to stabilise the debt situation of the country have yielded progress. In December, we will be able to settle the first $300 million instalment of the $2 billion Eurobond debt that falls due next year. pic.twitter.com/se95ogyPCk
— William Samoei Ruto, PhD (@WilliamsRuto) November 9, 2023
Ruto's government, de-dollarization
Ruto's government has been campaigning for de-dollarization to halt the Kenyan shilling from declining. In August, Kenya's Cabinet Secretary for Foreign and Diaspora Affairs, Alfred Mutua, expressed strong support for the BRICS' objective of reducing reliance on the U.S. dollar.
Mutua also emphasized the importance of developing an alternative payment system that facilitates seamless transactions among trading partners. Ruto had previously advocated for a pan-African payments system to promote intra-African trade.
Mutua criticized the current global development framework, highlighting its inherent biases that disadvantage developing nations. The mounting debt burden crippled many African countries, making it increasingly challenging for them to meet their financial obligations.
Kenya has been experiencing a dollar shortage, exacerbated by traders and banks hoarding dollars, leading to inflated demand. A primary cause for this U.S. dollar demand was the need for imports, especially oil and petroleum products.
In October, Treasury Cabinet Secretary Njuguna Ndung'u attributed the dollar crisis to the trade deficit between the country and the five BRICS nations — Brazil, Russia, India, China and South Africa. He said Kenya's economy would recover once the five BRICS nations implemented their de-dollarization plans.
Ndung'u highlighted that 43.7 percent of Kenya's imports from May 2022 to May 2023 had come from these BRICS nations. He further revealed that these economies accounted for approximately 70 percent of Kenya's trade deficit, which stood at $11 billion during that period.
In detail, exports to India, China, Saudi Arabia, Russia and Malaysia accounted for 1.0 percent, 3.1 percent, 1.4 percent, 0.6 percent and 0.3 percent, respectively.
China is a major trading partner for Kenya, with Chinese imports accounting for 19.3 percent of Kenya's overall imports. However, Kenya's exports to China constitute only 3.1 percent of its total merchandise exports.
If Kenya's trading partners were to adopt a different currency for trade, Kenya could hold more of its dollar reserves for transactions with Western nations. This would help stabilize the exchange rate of the Kenyan shilling against the dollar.
Drawing internal criticism
Ruto assumed the presidency in August 2022 amid accusations of vote-rigging and a dismissed legal challenge from opposition leader Raila Odinga.
Odinga, the head of the Azimio Coalition, has repeatedly opposed the Ruto administration's policies, particularly the escalating living costs and recent tax increases. This policy has ignited widespread violent protests in recent months.
During his campaign, Ruto promised to "empower hustlers" through economic relief programs to reduce financial burdens on families while decreasing the country's public debt. However, he later imposed a string of new taxes.
These include a controversial law passed in June that seeks to double the fuel tax from eight percent to 16 percent and a 1.5 percent housing levy for all employees.
In his inaugural address to the nation on Thursday, Ruto defended his economic policies, asserting that they are crucial for stabilizing the country's debt.
He noted that an estimated 50,000 Kenyans who were previously unemployed could participate in "life-changing" entrepreneurial ventures through his policies.