July 2025 will be a pivotal month for Kenya’s economic trajectory, balancing social stability against fiscal consolidation.
The government is facing waves of unrest from the unemployed youth, buldging the ranks of Gen Z protests as well as from civil service over unmet labour promises amidst austerity.

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The chaos of political dissent is playing out as riots on the streets now joined by disenfranchised factions of the political circles and economic recoil from austerity is cresting like a wave over the William Ruto regime.
Growing dissent
The looting of 7,354 bags of fertilizer, each weighing 50kg and valued at over Kes29.5 million from the NCPB depot in Maua, Meru County, during the June 2025 protests is an indication that farmers may also be drawing into the growing lists of dissenters.
The government risks inflaming this new constituency further as it goes after farmers to demonstrate fiscal consolidations without directly raising taxation.
The Finance Bill 2025 removes VAT exemptions for fertilizers, seeds, and pesticides, imposing a 16% tax. Reclassifying inputs as “VAT-exempt” (not zero-rated) blocks suppliers from claiming input tax refunds, indirectly inflating prices. This could raise production costs by 10–20% per input (e.g., fertilizer from KES 3,000 to 3,480/bag), straining smallholders.

Despite allocating KES 77.7 billion to agriculture, including KES 10 billion for fertilizer subsidies, the government may still end up with discontented ranks of farmers that could further swell protesting crowds.
While the political opposition is trying to seize public discontent and rally the ranks into a movement to replace President Ruto, they may have read the room wrongly.
The economy may have yet reached its limits to accommodate the fiscal consolidation needed to navigate out of the country’s debt crisis. The protests are unlikely to go away so long as Kenya’s debt cycle remains elevated over the next five years because the economy cannot extract taxes at the rate required by the restive global markets without looking like outright slavery/colonial.
The Gen Z movement may alter Kenyan society fundamentally creating a new political momentum that could dismantle Kenya’s ethnic compartmentalization that have secured elite interests since independence.
And while President Ruto and his allies may be tempted to show strength, that might just blow back in a country with Kenyan’s level of distance decay, that limits central control. Such a path will only lead down the path to violence.
Re-writing social contracts
If the Kenya Kwanza government can limp towards the end of their mandate, they must reform fast and hope the recent trips to China can stimulate the economy.

Kenya will need a fiscal boom and dramatic capital flows to counter the poly-crises at a time Kenya needs to cut spending in order to secure a new International Monetary Fund IMF deal.
Even with the Fund programme coming to an end in April without the final disbursements over failed austerity targets Kenya’s budget still needs to show consolidation ahead of a new agreement later this year.
Inflation resurgence
The bombs in the Middle East could not have dropped down at a worse time for Kenya. The brief in oil prices were threatening to spoil the narrative of moderating prices.
Kenya’s inflation declined to 3.8 percent in May 2025 from 4.1 percent in April on lower energy and utilities prices, especially on account of lower electricity prices.

Core inflation has been moving in the opposite direction due to the cost of food. According to the Central Bank of Kenya core inflation rose to 2.8 percent in May from 2.5 percent in April, mainly on account of higher prices of processed food items.
Kenya is a net food importer meaning the turmoil in global markets could also upset cereal prices and upset the forex balance that has kept the country afloat for over a year.
The shilling gained 13.55 percent year-on-year against the US currency in the first quarter, exchanging for 129.34 units per US dollar com-pared with 149.62 in the same period of 2024.
The currency could come under its first tests as Kenya negotiates a new programme with the IMF.
IMF Mid term
Businesses should monitor Finance Bill developments and IMF negotiations closely, as these will dictate short-term market confidence.
Kenya will face the IMF at a much weaker bargaining point given the desperation to get a deal, any deal to underwrite currency weaknesses ahead of a large ticket repayment. The authorities need to convince a Washington that has withdrawn from USAID and UN funding that it would be in the interest to support Kenya’s financial system.

The US President Donald Trump administration has been distant, and is now engulfed in internal fracturing and foreign policy crises in the Middle East which leaves the Kes exposed to speculators that circle above.
Alternatively, Kenya could look internally for growth and seek legitimacy from the people to back painful debt restructuring. Kenya may also need to do the hard work of winning regional trust to gain from a regional strategy to source for food across East Africa and seek leverage and lessons from Ethiopia on renegotiating terms with creditors.
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