Treasury CS Njuguna Ndung’u urges politicians not to politicize high cost of living

The Cabinet Secretary for the National Treasury and Economic Planning in Kenya, Professor Njuguna Ndung'u, recently sat down with CNBC Africa to discuss various economic issues affecting the country. One of the key topics of conversation was the high cost of living and inflation that have been a major concern in not just Kenya but across Africa and globally. Professor Ndung'u highlighted the challenges posed by supply side shocks, particularly due to the Russian-Ukrainian crisis and climate change-induced droughts in the Horn of Africa. While the immediate solution would be to replenish the supply, these factors have made it difficult to bring prices down quickly. He emphasized the need for a combination of demand side tools, including tightening monetary policy to address the issue. Despite the current challenges, he expressed optimism that the cost of living and inflation could see improvement with promising rains in the future. He also cautioned against politicizing the issue of the high cost of living, emphasizing that it is a complex problem that requires a holistic approach. Moving on to Kenya's debt situation, Professor Ndung'u discussed the importance of setting a debt anchor to guide the country's debt management. By establishing a target debt-to-GDP ratio, the government can better monitor and adjust its debt levels to ensure sustainability. This approach provides clarity and signals when adjustments need to be made to maintain macroeconomic stability. He emphasized that having clear rules and guidelines for debt management would help redefine the country's debt carrying capacity and provide a framework for discussing debt sustainability in the future. Regarding government projects and investments, Professor Ndung'u supported President Uhuru Kenyatta's call to prioritize the completion of existing projects before embarking on new ones. He underscored the importance of finishing infrastructure projects to lower transaction costs for the private sector and drive economic growth. By completing ongoing projects, the government can maximize the benefits and pave the way for additional private sector investments. He highlighted the role of public investments, especially in infrastructure, in stimulating economic vibrancy and growth. On the topic of tax incentives for investors, Professor Ndung'u emphasized the need to revise tax policies to incentivize private investment while optimizing government revenues. He stressed the importance of a tax system that does not distort the market or deter investors but instead encourages investment and ensures predictability. By creating a favorable tax environment, the government aims to attract and retain investors while generating necessary revenues for development. Looking ahead to the African Continental Free Trade Area (AfCFTA), Professor Ndung'u discussed the challenges posed by cross-border payment systems and the need for regional solutions. He highlighted the importance of developing new payment methods within regional blocs like the East African Community to facilitate trade and address currency conversion issues. By enhancing payment infrastructure and promoting regional payment systems, countries can overcome payment barriers and unlock the full potential of intra-Africa trade. In conclusion, Professor Ndung'u reiterated the importance of strategic economic policies, cooperation, and innovation to address the various economic challenges facing Kenya and the continent at large.