In 2015/16, more than a third of the Kenyan population lived in poverty, that is 36.1 percent measured at the national poverty line. This begs the question on what can be done to help lift more people out of poverty. Or – as is currently being debated in Kenya – what needs to be done to lift half of Kenya’s poor people out of poverty in the next 10 years?
With an estimated population of 51.4 million people and a projected poverty rate of 33.1 in 2018 based on standard growth assumptions, Kenya had about 17 million poor people in that year. Reducing this number to half or 8.5 million individuals in 2028 requires more than a reduction by 8.5 million individuals as Kenya’s population was growing at an estimated rate of 2.3 percent in 2018. Assuming this population growth rate to remain constant, Kenya will have a population of 64.5 million in 2028. With the objective to have no more than 8.5 million individuals living in poverty, this implies a poverty rate of 13.2 percent – or lifting about 1.3 million individuals out of poverty every year.
Over the last decade from 2005/6 to 2015/16, the Kenyan economy grew at an average of about 5.3 percent and managed to reduce poverty substantially by about 1 percentage point per year. Using standard growth assumptions and the same impact of growth on poverty as in the past, Kenya can expect a poverty rate of 23.1 percent in 2028.
In other words: If Kenya continues to grow robustly as in the previous decade, 14.9 million people will remain in poverty in 2028 – 6.4 million more poor people than the goalpost of halving the number of poor people in Kenya.
Thus, Kenya needs specific policies to be able to come closer to the goal of 8.5 million poor individuals in 2028.
So what can Kenya do to reduce poverty more quickly? The Kenya Poverty and Gender Assessment published by the World Bank looks in detail into the drivers of poverty reduction in Kenya over the last decade. In fact, poverty reduction was most effective in rural areas, from about 50 percent in 2005/06 to 38.8 percent in 2015/16, while the urban poverty rate remained statistically unchanged around 30 percent.
Improvements in agricultural productivity and raising farmer’s income through linkage to industrial value chains are paramount to further reduce rural poverty.
For example, this can be done through high-quality extension services to help farmers apply best practices and get better access to inputs, and formation of aggregation centres to help farmers bargain for better prices for their products. In fact, agriculture accounts for at least a quarter of GDP over the last decade and is key for poverty reduction in rural areas as 57 percent of rural households derive their incomes from it.
Also in other countries, poverty was often initially reduced with the help of agricultural growth. For example, China’s market reforms in 1978 resulted in spectacular agricultural growth reducing poverty while labour started to be reallocated to a blossoming sector of rural enterprises.
A similar case can be made for South Korea, where a strong phase of agricultural, rural-based, development seems to have been a prerequisite for successful posterior growth. Thus, agriculture and rural development remain critical even when the economy starts shifting towards industry or services.
But Kenya also needs more and better job opportunities especially for youth in the rural areas and particularly in cities where improving mass transportation and other urban infrastructure is also key.
A large fraction of the urban population cannot take advantage of living in a city. Instead, they often live in informal settlements bearing the high costs of living in a city, without being able to tap into its opportunities, for example, through better job opportunities or better access to services.
To remedy this situation, infrastructure investments need to improve transportation and service delivery, while more affordable and formal housing can reduce the high costs.
Less evidence is available to support policies incentivising people to migrate from rural to urban areas, especially because good jobs are also scarce in urban areas, and often require higher skill sets that take time to build.
Thus, policies on human capital development such as improving education as well as health delivery with a focus on the poor will be a crucial investment into the future, so that also the poor will be able to take advantage of higher-skilled jobs and contribute to higher productivity in Kenya.
So the answer to the question on what it would take to lift half of the poor from poverty in the next 10 years is a combination of policies, in which the agricultural sector will continue to play an important role, complemented by more and better jobs as well as improvements in education and health.
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