Nairobi, Kenya — A cumulative 50% spike in diesel prices across April and May has triggered deadly transport strikes and protests in Nairobi, exposing deep structural vulnerabilities in Kenya’s economy and broader African supply chains.
An interim agreement has since paused the demonstrations, but the government faces shrinking fiscal options amid a global energy crisis. The price hikes have affected critical sectors including agriculture, road, air and sea freight, and retail, driving up costs for basic consumer goods.
Economist and activist Sungo Oyoo highlighted the severity of the situation. “Last week we saw a 23.5% increase in the cost of fuel on the 15th, and last month there had been a 24.2% increase, cumulatively bringing that to about 50% over the past one month,” Oyoo said.
Fuel prices in Kenya are set monthly on the 15th by the Energy and Petroleum Regulatory Authority. However, Oyoo argued that taxation levels have reached unsustainable heights in a country already struggling with high living costs.
“Taxes account for almost 50% of the cost of fuel,” he explained, using an example where fuel landing at Mombasa port at 100 shillings per liter faces over 80 shillings in taxes plus retailer margins, resulting in a pump price of around 200 shillings per liter.
The levies include excise duty, road maintenance levy, petroleum development levy, railway development levy, and petroleum regulatory levy. A value-added tax is then imposed on top of these, despite Kenya lacking a functional oil refinery — which was shut down years ago — meaning the country imports already refined products with no local value addition.
The hikes prompted transporters, including matatu drivers, bus operators, and long-distance drivers, to strike last week, bringing significant parts of the economy to a halt. Many found it difficult to pass on higher costs to already strained consumers.
Sungo Oyoo warned of cascading effects across multiple sectors. In agriculture, higher diesel costs impact small-scale irrigation pumps, transportation of inputs to farms, and movement of produce to markets — both local and export. Fertilizer prices are also expected to rise sharply, as key ingredients are byproducts of oil production, primarily sourced from the Middle East. This threatens food production and is likely to push household food prices even higher, raising concerns over food security.
On broader impacts on ordinary citizens, Oyoo noted challenges in accessing markets, healthcare, and education due to elevated transport costs.
He pointed to policy decisions since the 2022 elections, when the government scrapped fuel subsidies and doubled value-added tax on fuel. While VAT has recently been reduced, Oyoo called for it to be fully scrapped from fuel products. He also criticized the securitization of loans, citing a 175 billion shilling ($1.5 billion) loan last year tied to seven shillings per liter of fuel for debt repayment.
To build resilience, Oyoo advocated reducing over-reliance on petroleum by expanding green energy solutions — already powering over 80% of Kenya’s electricity grid through hydro, wind, geothermal, and solar — into transport, agriculture, and other sectors.
Regionally, he emphasized the need for stronger intra-African trade and collaboration. With several oil-producing nations on the continent, increased internal trade could ease external shocks. Oyoo welcomed initiatives like Dangote’s planned refinery in East Africa and called for joint infrastructure such as pipelines, alongside full implementation of the African Continental Free Trade Area (AfCFTA) protocols.
“ So long as African countries trade more with the rest of the world than with themselves… we will continue to be victims of global events which we are not responsible for,” he said, referencing recent disruptions like tensions in the Strait of Hormuz.
The ongoing crisis underscores Kenya’s urgent need for structural reforms to shield citizens and strengthen economic resilience against future fuel shocks.
