Over the last decade, Kenya has been widely covered in global economic news. M-PESA, the world’s first mobile banking technology, was invented in Kenya, and the country continues to be a vibrant technology hub in Africa. The growth between 2000 and 2009 was quite volatile, averaging 3.6 percent every year, and developing a downward trajectory following the 2007 presidential elections, PEV (post-election violence), protracted drought, as well as the global financial crisis of 2008. Things took a turn in the years following 2010, with growth averaging above 5%, which is higher than the average in Sub-Saharan Africa. The period following 2010 has also witnessed rising per capita incomes for the country, and Kenya attained lower-middle-income status in 2014. The strong growth during this period has been attributed to the country’s service sector, primarily in banking and mobile telecommunications. However, despite these gains, various challenges continue to affect Kenya’s economic promise chief among them–poverty.
Kenya’s economic growth over the last decade has translated into gains in the fight against poverty, with over 4 million Kenyans escaping poverty during the same period according to the World Bank. However, a closer inspection reveals that not every section of the population benefited from this remarkable growth. The poorest people in Kenya inhabit rural areas where poverty rates are higher, and per capita expenditures lower than urban areas. However, the proportion of neer-poor is consistent across urban and rural areas. When defined as non-poor individuals living on less than two times the poverty line, there are approximately 43% to 44% near-poor individuals in urban and rural areas in Kenya. The percentage reduces to about 26% to 28% when defined under a more strict threshold of 1.5 times the poverty line. In other words, the vast majority of Kenyans, close to 80 percent, are either near the poverty line, or income poor. Most don’t have access to reliable food or even a mattress to call their own. A focus on income poverty diagnosis, alongside the near-poor, is essential in assessing how to alleviate poverty, and ensuring that households that are more vulnerable to poverty are not impoverished overtime.
Statistics by the Kenya Integrated Household Budget (KIHBS) also show variations in the poverty gaps and their magnitude. Poverty continues to be more prevalent in rural areas. The smallest proportion of income poor is found in peri-urban regions. While the poverty index is a measure of the number of people below the poverty line, the poverty gap measures the difference from the poverty line and shows the number of transfers required to move households above that line. The poverty gap in the East-African country shows that the income-poor families in rural regions have a higher difference from the poverty line in comparison to their counterparts in urban regions. Poverty distribution is also more severe in rural regions, which comprises the majority of the country’s poorest populations.