Kenyans earning more and living longer: Study

December 2019 Business Daily; Kenyans are earning more on average; they are living slightly longer and staying in school for more years, boosting the country’s Human Development Index up one notch from position 148 in 2017 to 147 last year.

According to the latest United Nations Development Programme (UNDP) index publishes on Tuesday, each Kenyan on average made Sh309,778 ($3,052) up from Sh298,004 ($2,096) in 2017.

Kenyans are now expected to live up to an average of 66.3 years, up from 65.9 last year and have an average of 6.6 years of schooling out of an expected 11.1 years, which is higher than the 4.6 target set by the 2030 Sustainable Development Goals.

Despite the increase in average wealth, UNDP has raised concerns about the rising levels of inequality that are concentrating wealth at the top, leaving behind huge swathes of the population that is struggling economically.

UNDP said that the richest 10 percent of the population took up half of the country’s incomes, leaving the other 90 percent at the bottom of the economic pyramid to scramble for the other half.

“In Kenya in 2015 the top 10 percent received 48 percent of national income, while the bottom 40 percent received nine percent,” the report said, painting a dire picture of the inequalities that divide the rich and the poor.

Central Bank of Kenya data shows that while long-term and fixed deposits associated with the wealthy, money market funds and cash-rich corporates rose from Sh1.28 trillion in October 2018 to Sh1.41 trillion in October this year, the cash in people’s pockets reduced from Sh269 billion to Sh227 billion in the same period.

Foreign currency deposits also rose from Sh553.2 billion to Sh625.3 billion in a similar period, an indication that the wealthy are protecting their value and hedging against the local currency.

Kenya has been a country of contrasts, growing its Gross Domestic Product at an impressive average of 5.7 percent over the last couple of years.

However, this growth has failed to trickle down to the population owing to the structure of the economy. Agriculture, which employs 57.5 percent of the population, pays low wages for workers and proportionately low returns for farmers, accounting for lower earnings per capita.

The latest Kenya National Bureau of Statistics data indicates that dominant sectors of the economy such as agriculture, which accounts for 34.2 percent of gross domestic product, transport (eight percent), manufacturing (7.7 percent) and real estate (seven percent) paid the least wages although they account for more than half of the GDP.

Agriculture’s share of the top earners was a measly 0.9 percent, manufacturing (two percent), real estate (3.1 percent) while the ICT sector, where East Africa’s most profitable firm Safaricom sits, had 3.2 percent of its workers earning above Sh100,000.

UNDP warns that rising inequality is fuelling unrest globally witnessed by a wave of demonstrations triggered by ‘the cost of a train ticket, the price of petrol, political demands for independence’.

“What we are seeing today is the crest of a wave of inequality; what happens next comes down to choice. Just as inequality begins at birth, defines the freedom and opportunities of children, adults and elders and permeates those of the next generation, so, too, policies to prevent inequalities can follow the lifecycle,” Achim Steiner, the UNDP Administrator, said.

While Kenya has been lauded for introducing policies like free education and mobile-led financial inclusion, funding for education as a percentage of the Gross Domestic Product has been on a decline since hitting 7.3 percent in 2005. The index showed that Kenya spent 5.2 percent of GDP on education in 2017, the lowest since 2000.

Kenya’s spending on health is also at a 16-year low – at 4.5 percent of the GDP in 2016 – down from 6.1 percent in 2010.

The report stresses that health is one of the biggest challenges for all countries posing the serious risk of sinking even the well-off middle class into poverty.

“As Anirudh Krishna points out in his analysis of the life stories of 35,000 households in India, Kenya, Peru, Uganda and North Carolina (United States), many low-income individuals are just one illness away from poverty,” the report states.

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