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African governments are introducing new policies to rebuild household purchasing power and strengthen public confidence as frustration grows over the rising cost of living. Countries including Kenya and South Africa are moving away from broad subsidies and temporary price caps on essential goods, choosing instead measures that directly affect disposable income and create pathways for low-income earners to build wealth.
Despite official figures suggesting that inflation is easing and macroeconomic conditions are improving, many citizens say they have not felt meaningful relief. The gap between economic indicators and everyday experience has turned the cost-of-living challenge into both an economic and political issue across the continent.
In Kenya, Treasury Cabinet Secretary John Mbadi, defended proposed tax reforms aimed at shielding low-income earners, saying the government had taken note of concerns that rising prices were steadily eroding earnings and weakening household purchasing power.
“We have been told a number of times, kindly put money in people’s pockets. That the purchasing power of people has dwindled,” Mbadi said in Nairobi during a bell ringing ceremony to launch Safaricom’s Ziidi Trader, a service that allows Kenyans to buy and sell shares of public listed firms directly through the M-pesa mobile money platform.
“Now those who are earning US$233(Ksh30,000) and below, we are saying should pay zero tax. And by the way, it is not just those who are earning US$233(Ksh30,000) and below. Any money that you earn which is US$233 (Ksh30,000) and below, even if you are earning a million, your US$233(Ksh30,000) will also not be taxed,” he said.
The Kenyan government has also proposed lowering the tax rate on the next income band above Ksh30,000 from 30% to 25%, a move Mbadi framed as meaningful relief for low income households.
Kenya has also moved to dismantle long-standing barriers to capital market participation, positioning retail investment as part of its broader cost-of-living response. The launch of the Ziidi Trader platform is expected to widen access for millions of citizens, especially low-income earners who were previously locked out of formal investment channels.
“This platform represents a decisive turning point in how citizens engage with the stock exchange. It opens the doors of market participation wider than ever before,” President William Ruto said at the launch.
The platform allows investors to purchase as little as a single share through their mobile phones following regulatory reforms that eliminated mandatory broker intermediation and scrapped the previous minimum investment threshold of US$390(KSh50,000). The changes significantly lower entry barriers to the Nairobi Securities Exchange (NSE).
“For a very long time it looked a very complicated process. Serious accounts, brokers in between, and everything along the journey. Today, there is a pathway for the mama mbogas(vegetable vendors) and the boda boda guys from the comfort of sitting on their motorbike with their phone, they can buy shares and trade at the Nairobi Stock Exchange,” explained President Ruto.
According to the President, the reforms have already coincided with a sharp rise in market activity, with total market capitalisation at the NSE expanding from about US$9.3 Billion (KSh1.2 trillion) three years ago to nearly US$23.2 Billion (KSh3 trillion) last year. He expressed confidence that the number of Kenyans participating in the capital markets could rise from the current 200,000 investors to several million in the near term.
However, the reforms have drawn criticism from opponents who view the measures as politically calibrated, coming as President Ruto, who was elected on a bottom-up economic transformation agenda, edges toward a second-term bid.
But Mbadi pushed back against criticism that the measures were politically motivated, arguing that restoring purchasing power was itself a legitimate policy goal.
“If it is a campaign tool and it gives money back to the pockets of Kenyans, it is okay. It is a good campaign strategy,” Mbadi said.
Kenya’s National Treasury said it had reduced the risk of near-term debt distress while stabilising key macroeconomic indicators, including inflation and the currency. Mbadi pointed to Moody’s recent rating action as evidence of improved fiscal credibility, saying the agency’s positive assessment signalled growing confidence in Kenya’s economic trajectory.
“It is not a coincidence that Moody’s have said now we have a stable economy. So if people are out there saying that the economy is in shambles, the economy is on its knees yet we are rated as having moved from CAA1 with positive outlook to now B3 with a stable outlook. So what evidence do you want?” he asked.
Kenya’s Inflation in 2025, recorded a high of 4.6%, primarily driven by food, transport, and energy costs, while the shilling’s relative stability have been linked to easing price pressures. In South Africa, the government announced a 5% rise in the national minimum wage to US$ 1.90( R30.23) an hour from March 2026. Domestic and farm workers have been listed as the biggest beneficiaries. The rise is considered a significant increase as it outpaced inflation rate and exceeded expectations from businesses and analysts, largely seen offering some relief to consumers.
“The increase will inject badly needed stimulus into the economy, spurring growth, sustaining and creating jobs,” South Africa Parliamentary coordinator for organised labour, Matthew Parks said in a statement.
AgriSA, South Africa’s largest farmers’ lobby, said wage adjustments alone risk weakening employment sustainability, accelerating unemployment rather than improving worker welfare. The timing, AgriSA Chief executive officer, Johann Kotze said would put further strain on a sector still recovering from drought, climate volatility and animal disease outbreaks. The livestock industry it said accounts for between 40% and 45% of agriculture’s contribution to Gross Domestic Product (GDP).
“While parts of the sector are showing recovery in 2025, this recovery remains fragile and uneven,”Kotze said in a statement.
Statistics South Africa data shows at an average inflation rate of 3.2% in 2025, it was the lowest in 21 years for the country. The annual rate for food and non-alcoholic beverages (NAB) was however closed at 4.4% in December 2025.
By Conrad Onyango, bird story agency.
