Netizen regrets voting for Ruto after employer plans to exit Kenya

In a recent tweet that has sparked significant discussion, Gabby Yego, a Kenyan citizen, expressed her distress over her vote for President William Samoei Ruto in the 2022 presidential elections.

The netizen raised concerns about job security due to new tax policies advanced by the current administration.

Gabby's post on X platform read, "I still can’t believe I voted for William Samoei Ruto. My job is at risk because our company is an international company and the owners are leaving because of taxes."

This sentiment is not isolated, as many Kenyans have started voicing their worries about the economic repercussions of the current administration's tax policies.

The concerns primarily revolve around the impact of these policies on both local and businesses operating in Kenya.

The Economic Landscape

President William Ruto’s administration has introduced several tax reforms aimed at increasing government revenue.

These measures include higher corporate taxes, changes in value-added tax (VAT) rates, and new levies on digital services.

While the government argues that these reforms are necessary to fund infrastructure projects and public services, businesses and employees are feeling the strain.

The latest blow has been the Finance Bill 2024 which has also proposed a raft of more punitive taxes.

Digital ride-hailing platforms Bolt and Uber are among firms that have warned that they might shut down their operations in Kenya if Parliament approves a proposed six percent tax on gross turnover for non-resident firms.

Addressing the National Assembly’s Finance and Planning Committee, both companies argued that the introduction of the Significant Economic Presence (SEP) Tax could lead to the industry's collapse due to financial losses or narrow profit margins.

Private companies, which play a significant role in Kenya’s economy, contribute to job creation, technology transfer, and economic growth.

READ: Copia Kenya announces 1,060 job cuts & possible closure after 11 years

The fear of businesses shutting the country poses a serious threat to employment and economic stability.

In Kenya about 3.2 million are employed in the formal sector, with the government employing 968,425 people. This means that the rest depend on the private sector.

The Impact on Employees

Gabby Yego’s tweet highlights a growing anxiety among employees of many firms.

The potential departure of these companies could lead to massive job losses, affecting thousands of families.

Employees are concerned not just about losing their jobs but also about the broader implications for the economy.

With fewer international businesses operating in Kenya, there would be a reduction in foreign investment, slowing economic growth and innovation.

10 Companies that have exited the Kenyan market over economic downturn

In 2023 alone, 10 international companies announced they were exiting operations in the country.

1. Procter & Gamble (P&G) announced plans to exit Kenya by June 2024 due to high costs, currency shortages, and declining sales. The company will shift to a distributor importation model, affecting approximately 30 direct workers and contractors.
2. Jumia Foods - Jumia closed its food delivery business in December 2023 due to unfavorable conditions. The decision was part of a strategic shift towards profitability, focusing on the physical goods business.
3. GlaxoSmithKline (GSK): GSK exited Kenya, citing low sales and a strategic focus shift towards more profitable prescription drugs and vaccines. The company will maintain its manufacturing facility in Nairobi under its independent consumer healthcare subsidiary, Haleon.
4. Eastend Junior Academy: The school announced its permanent closure in December 2023 due to the challenging economic environment. The directors, both over 70 years old, have decided to retire, leading to the closure from 2024.
5. Base Titanium: The Australian mining company will cease mining activities in Kwale, Kenya, by the end of 2024 due to the inability to find new mineral resources. This decision will have a significant impact on the local economy and job losses.
6. Africa Oil Kenya BV: The Canadian-owned oil and gas exploration firm exited the Turkana oil project in May 2023 after settling a tax dispute and relinquishing its 25% shareholding to Tullow Oil.
7. Zumi: The B2B e-commerce startup shut down due to its inability to raise necessary funding. The company will lay off its team of 150 people, citing the current macro environment as extremely difficult for fundraising.
8. Sendy: The Kenyan logistics startup shut down operations and sold its assets. Over 200 employees were affected by the closure.
9. De la Rue: The security printing firm suspended its operations in Kenya, citing reduced demand for banknotes and a significant decline in revenue. The company remains open to exploring future business opportunities in Kenya if the economic climate improves.
10. MarketForce: The B2B e-commerce company shut down operations in three of its five markets in Africa and is launching a social commerce spinout called Chpter. The company's super-app, RejaReja, will only be available in Uganda after discontinuing the offering in other markets

Government's Stance

The government has defended its tax policies, stating that they are essential for national development.

President Ruto has in the past announced that his government plans to increase the tax to GDP ratio from 14%, to 22% by the end of his first term.

However, critics argue that the government needs to strike a balance between raising revenue and creating a conducive environment for businesses.

They suggest that instead of imposing heavy taxes, the government should focus on widening the tax base and improving tax compliance.

Social media platforms have become a battleground for this debate, with many Kenyans expressing their dissatisfaction and fear.

Some support the government’s efforts to increase revenue but believe the implementation could be more strategic.