Kenya’s President William Ruto has claimed credit for saving Ksh8 billion in just one month by dismantling the previous government’s Unga subsidy program, which was well-intentioned but poorly implemented.
The subsidy program was designed to lower the cost of unga and make it more affordable for low-income Kenyans but had several problems that made it ineffective and costly.
The subsidy was poorly designed, leading to leakages and fraud, and was unsustainable in the long run, placing a heavy burden on taxpayers and distorting the market.
Ruto’s approach to dismantling the previous subsidy program was targeted and effective. Instead of continuing with the blanket subsidy, Ruto’s team used data analytics to identify the most vulnerable Kenyans who genuinely needed the subsidy.
This targeted approach ensured that the subsidy reached those who needed it the most, rather than being wasted on those who could afford to buy unga at market prices.
Ruto’s team also restructured the subsidy program to eliminate leakages and fraud. The government provided direct cash transfers to the most vulnerable households instead of distributing the subsidized unga to retailers and millers.
This not only reduced the risk of fraud but also gave the beneficiaries more flexibility in choosing what to buy with the cash transfer. Ruto’s approach to subsidies has so far been sustainable and might be in the long run.
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