Economy Is Going To Shrink: Ndii Warns Of Mass Closure of Kenyan Businesses

David Ndii, Chairperson of President William Ruto's Council of Economic Advisors (CEA), has warned that the shrinking Kenyan economy could force many businesses to close down, rendering millions jobless.

In a detailed thread on X (formerly Twitter) on Tuesday, December 19, Ndii began by accusing former President Uhuru Kenyatta of creating an economic legacy filled with debts procured at the expense of producers to satisfy the elite in social class.

Confessing that the economy would contract rather than expand in the current administration, Ndii pointed out that a lot of Kenyan businesses catering to the wealthy class may have to change tact and focus on production, which guarantees profits.

President William Ruto (R), Kikuyu MP Kimani Ichung'wah and economist David Ndii at a retreat. /FILE

"Uhuru’s economic legacy is fake debt financed prosperity which benefited urban rentier elites, at the expense of producers, reflected in consumerism similar to resource windfalls economists call “Dutch Disease”. There was no other way this was going to end but in tears.

"This economy is going to shrink. The other day someone who deals in high-end cars asked me when I think the economy would turn around. I gave him my honest opinion and told him his line of business was unlikely to recover and he might want to look into a production-oriented sector," Ndii gave his example of a car dealer who transitioned into farming.

The economist went on to give him a  few tips on some value chains to think about, claiming that most Kenyans don’t know that farming accounts for only 20% of agricultural value chains, with the rest being input supply, logistics, processing etc.

Ndii further warned on businesses relying on the government to prepare for disruptions, predicting that the state of the economy would even force several high-end entertainment joints to shut down.

"So here’s the low down. If you are in a government-facing or dependent business, prepare for disruption. The facilities gaming the NHIF will have to shape up or ship out. Most high-end entertainment joints where tenderpreneurs blow 100k a night will have to reinvent or close.

"I’m not saying corruption will end, just that there simply aren’t enough lootable resources to sustain an industrial-scale corrupt lifestyle economy. The debt consumption economy will shrink because it has reached where I’ve warned it would end a decade ago," he went on.

"You should follow Uhuru and recover the money. Why? If Uhuru should return, everyone who was part of the gravy train should also," he again cornered the former Head of State.

"Whether we revisit or move on, the price will be paid. As I keep saying, financial delinquency has no solutions, only consequences."

On Sunday, December 17, President William Ruto put to rest contradictory information from state officers on the cost of living and Kenya's economic status.

Journalists at a media roundtable held at State House asked him when the cost of living would come down considering his lieutenants were contradicting themselves on the issue.

"I said our economy today is out of distress and that is the truth. For your information, if I wasn't President, the kind of decisions I have made are difficult decisions...very painful decisions that I know will cause pain but it is better we make those decisions now than get Kenya into debt distress," he addressed.

To put the matter to rest but without giving a specific time when the cost of living will come down, Ruto remarked that Kenya was economically stable but had to still navigate rough waters, further indicating that almost eight countries in Africa are in debt distress.

"All we have done is to avoid jumping from the cliff because we have put breaks in expenditure, we have negotiated a good package with the World Bank, the International Monetary Fund and with bilateral countries and that is why I have been on the road," he said.

"It was necessary for me to step in and stabilise so that Kenya doesn't go into debt distress."

President William Ruto engaging journalists at State House on December 17, 2023. /PCS