Kenya’s economic growth has contributed to poverty reduction, but progress has slowed and remains uneven.
Latest data from the Kenya National Bureau of Statistics (KNBS) shows that poverty is now less responsive to growth, and although rates were declining before the COVID-19 pandemic, the crisis reversed many of these gains, leaving poverty levels above pre-pandemic levels.
Disparities persist, with higher poverty rates among rural populations, counties in Arid and Semi-Arid Lands (ASALs), female-headed households, and children—particularly in terms of multidimensional poverty among children.
While inequality declined from a Gini index of 47 per cent in 2005/06 to 38.4 in 2022, inclusivity in economic growth remains limited and contributes to the slow pace of poverty reduction.
What is hindering Kenya’s economic progress?
High unemployment, labour underutilization, and weak formal job creation continue to hinder broad-based economic progress.
Unemployment rose from 2.6 per cent in 2014 to 5.6 per cent in 2023, disproportionately affecting youth and women.
Despite a high labour force participation rate of 73.7 per cent in 2021, most employment remains informal and is characterised by low productivity. As a result, achieving Kenya’s Sustainable Development Goals (SDGs) targets of ending extreme poverty, halving poverty and ensuring equal rights and access to resources for all, especially the poor and vulnerable, by 2030, remains a challenge.
Fiscal space is further constrained by rising public debt, increased interest costs, slowing economic growth and persistent poverty. These constraints have heightened public pressure for tax relief, as demonstrated by the Generation Z-led protests of 2024, which led to the withdrawal of the Finance Bill 2024.
Despite these challenges, the current context underscores the urgent need for a fiscal strategy that restores public finances, rebuilds confidence, promotes inclusive growth, and drives social progress.
Reducing inequality and poverty is also a national priority, as underscored in the Kenya Vision 2030 and its successive Medium-Term Plans.
What is Kenya’s plan for realising equity and poverty eradication?
Through its long-term development blueprint, the Kenya Vision 2030, Kenya has committed to realising equity and poverty eradication by promoting broad-based access to public services and income-generating opportunities, while ensuring fairness in resource distribution and political representation, especially among vulnerable and marginalised groups.
In line with this long-term development agenda, Kenya has, over the years, implemented fiscal policies—including personal income and indirect taxes, as well as investments in education, healthcare, and social protection programmes such as cash transfers—to address poverty and inequality.
Despite these efforts, the inclusivity of growth remains limited, and the impact of fiscal policy on poverty and inequality reduction is mixed.
