Kenya is making life more difficult for its middle class

In 2015, a report by Pew Research Centre showed that Kenya’s middle class was plunging deep into poverty while the global middle-income population doubled. The situation hasn’t changed much since then, with government seem targeted at further declining the East African country’s middle class. The International Monetary Fund (IMF) defined middle-income households as those whose real incomes are within 50 percent to 150 percent of the median income.

In what looked like an attack on the middle class, Kenya’s Electricity Regulatory Commission (ERC) introduced new tariffs that will see power costs for middle class households rise by up to 54 percent. The new tariffs which took effect on August 1 for prepaid users and July 1 for post-paid users, will, however, see poor households that consume less than 10 units of electricity per month and the rich that use more than 1,500 units enjoy lower bills.

For domestic consumers, whose consumption for both post paid and prepaid does not exceed 10 units would be charged Sh12 ($0.12 ) per unit for units consumed. while domestic consumers whose consumption is greater than 10 units but does not exceed 15,000 units would be charged Sh15.60 ($0.16) per unit consumed.

Meanwhile, non domestic small commercial consumers metered whose consumption does not exceed 15,000 units would be charged Sh15.80 (0.16) per unit consumed. commercial and industrial consumers metered at 11,000 votes would be charged at Sh10.90 ($0.11) per units consumed.

When the commission announced new tariffs and scrapped out fixed monthly charges of Sh150 ($1.5) for domestic and small commercial and Sh17, 000 (about $170) for industries with limitless consumption, Kenyans, especially the middle class heaved a sigh of relieve, not knowing that the new tariffs would dig deeper holes in their pockets.

This class of Kenyans, who are active on social media, have cried out, dismissing the government’s claims that it has made the cost of power across the eight consumer platforms cheaper. Following the complaints, the government revised the tariffs but was met with an even angrier citizenry.

Pavel Oimeke, director general of the commission announced that “ERC’s review follows the need to accommodate more renewable energy costs and address the numerous complaints by electricity domestic consumers on the complexity of the tariff billing regime which was difficult to understand.”

The commission said the average retail tariff inclusive of taxes and levies reduces from Sh23.49 per kilowatt hour to Sh20.18 per kilowatt hour representing an overall reduction of 14 percent. Adding that, the threshold for the lifeline category has been reduced from 50kWh to 10kWh per month to benefit the 3.4 million low income households who consume less than 10kWh a month.

The clarifications angered some Kenyans who say the government increased rather than reduced tariffs citing the lifeline catergory which was previously 10Kwh but had increased to 50Kwh. Polycarp Otiendo and other Kenyans took to social media to express their displeasure. While questioning the new tariff, Otiendo noted that on 2nd of July he paid the sum of  Sh1,000 and got 63.6 tokens meanwhile after a revised tariff, he paid Sh 1,100 and got just 49.6 tokens.

Another Kenyan on Twitter Josephat Mutua said he preferred the old tariff, stating that the government’s alleged increase for 11-100kw users is not 20 percent but 40 percent.

In countries where consumers are a huge driver of the economy, the middle class is key to continuous growth. In 2016, household consumption for Kenya was 79.8 percent. While it fluctuated substantially in years before 2016, it increased on average through 1997 – 2016 period, and has been responsible for the impressive growth in the East African country.

The tariff hike may also hurt Kenya’s manufacturing industry as manufacturers will now pay 30 percent more in electricity. Although, the ERC argued that manufacturers in Kenya will get relief from the reduction in fuel cost charge (FCC) and the removal of the fixed cost charge, they maintained that an increase in base tariff will only make Kenya uncompetitive. Kenya’s neighbours who are fellow members of the East African Community are working to reduce the cost of power to boost industrial growth.

Kenyan lawyer Apollo Mboya agrees with the ERC on the new tariff favouring manufacturers. Miffed by the move which he said discriminates against a significant majority of domestic consumers while favouring the minority bulk power consumers, Mboya has taken Kenya Power and the Energy Regulatory Commission to court. He argues that both Kenya Power and the ERC do not have the constitutional mandate to review tariffs.

Meanwhile, leaders of the Kenya Private Sector Alliance (KEPSA)and the Kenya Association of Manufacturers has met with the ERC to discuss the new electricity tariffs, hoping to find a solution to favours everyone.