What's next for John Mbadi, Treasury CS nominee who opposed Ruto's tax increases

Treasury Cabinet Secretary nominee John Mbadi is set to join the government at a time when President William Ruto's administration is facing protests triggered by the withdrawn Finance Bill 2024.

Mbadi, prior to his nomination by Ruto to serve in the Cabinet, was a vocal critic of the government's fiscal policies, including the Bill and Ruto's first CSs.

During the vetting process of Ruto's first cabinet in 2022, Mbadi made a passionate speech where he predicted the downfall of the former CSs, whom he argued were incompetent to serve and deliver.

"Let's give Ruto his skunk." An excerpt of the now-famous speech of the nominated MP Mbadi reads. He further argued that the opposition then had the option to reject the CSs or allow Ruto to have his way.

In October last year, Mbadi also lashed out at Ruto's administration, arguing that it was overtaxing Kenyans and negating the effort to grow revenue.

"We agree that the debt level is unmanageable, but the mistake the government is making is to imagine it will collect more from Kenyans by increasing taxes."

On Wednesday, when Ruto nominated Mbadi for the position of Cabinet Secretary for National Treasury, it signalled a turn for the harshest critic of the government's fiscal policy to implement some of the measures he vehemently criticised.

Ruto selected the ex-Suba South lawmaker as he extended an overhaul of his administration to end anti-government protests in which at least 54 people have died.

The protests were triggered by the withdrawn Finance Bill 2024, which enshrined stringent tax proposals.

Mbadi, an accountant by profession, is chairman of the opposition party, the Orange Democratic Movement, led by former Prime Minister Raila Odinga. Settling for an accountant for the role is one of the changes Ruto has made in his appointments, having been criticised for previously appointing CSs to dockets outside their professions.

Should he secure Parliament's approval, Mbadi will be responsible for tightening the country's budget in the coming financial year. His goal will be to reduce government wastage, a key issue that has sparked protests among young Kenyans.

It remains to be seen how Mbadi will address the anger of protesters who associate tax hikes and legislation passed in 2023 with the International Monetary Fund (IMF) loans as the country struggles under the burden of a severe debt crisis.

A plain-cloth police officer lobs a teargas cannister at protestors in the Nairobi CBD on June 25, 2024. (Photo: Hafsa Hassan)

The IMF conditioned the loans on raising taxes, reducing subsidies, and cutting government waste. These measures were intended to increase government revenue while decreasing spending.

Those measures began last year. Since 2022, Ruto has prioritised the International Monetary Fund (IMF) programme with loan disbursements based on periodic reviews of the government's progress in implementing the financial institution's stipulated reforms.

Even after withdrawing the Finance Bill 2024, Ruto insisted that it was good for the nation and would have aided him in raising revenue and funding development projects.

During a media roundtable interview at State House on Sunday, June 30, Ruto argued that the withdrawal of the Finance Bill 2024 had set Kenya back two years and that he will need to borrow at least Sh1.2 trillion this year to keep the government operational.

In response, he set out various austerity measures to reduce the pressure on taxpayers and cut down expenditures as he sought to manoeuvre past the economic conundrum.

The National Treasury directed ministries and government departments to cancel all new projects for this financial year as the government re-organised its budget following the rejection of the Finance Bill, 2024.

Former Treasury Cabinet Secretary Njuguna Ndung'u, in a circular to all accounting officers, further directed that only pending bills carried from the previous Financial Year 2023/2024 be prioritised and that no new tenders should be awarded.

Ndung'u also instructed the accounting officers from all the ministries to revise their budget estimates and submit them by the close of business on Monday, July 8.

"These measures will be undertaken in all Ministries, Departments, and Agencies (MDAs), including semi-autonomous government agencies, in the expenditure areas provided," Ndung'u said in the circular.

According to the Treasury, 24 areas are targeted for massive budget cuts as the government seeks to plug in the hole left by Sh344.3 billion after President Ruto declined to assent to the Finance Bill, 2024.

According to the circular, monitoring and evaluation expenses, operating expenses, refurbishment of buildings, the purchase of vehicles and other transport equipment, the purchase of office furniture and general equipment, and the purchase of generators were reduced by 100 per cent.

Other expenses that were reduced in full included rehabilitation and renovation of state offices, research, feasibility studies, project preparation and design, housing loans to public servants, car loans to public servants, confidential expenditures, examination and invigilation fees, membership fees, and subscriptions to professional and trade bodies.

The question thus remains, will Mbadi enhance more austerity measures, cut down on wastage of resources, alleviate the taxpayers from the pain of stringent tax proposals, and lower the cost of living?

President William Ruto chairs a cabinet meeting that was briefed on the budget statement in June 2024. (Photo: PCS)