Startimes

Kenya’s Middle Class Plunging Deep Into Poverty

Written by

A PewResearchCentre 2015 report shows that Kenya’s middle class is plunging deep into poverty. The report shows that while the global middle-income population has doubled, Kenya’s middle class is declining. The most recent global data shows that middle-income population rose globally from 7% to 13% – almost doubled – while the upper-middle income population rose by just 2%. The data further shows that 71% of the global population is either poor or low-income.

Middle class population

Global population distribution by income

The report titled “A Global Middle Class is More Promise than Reality” shows that only 5% of Kenyans are within the middle-income bracket, compared to 13% globally. The middle-class has actually dropped by about 2% from the 2001 levels. If you were to fit them inside a county, they would all fit inside Nairobi County and still have room for 800,000 more people to reach Nairobi’s 2009 census survey population.

Further, 31% of the population is poor and this is a 9% increment from the levels in 2001. Low-income Kenyans are 62% of the population – a 7.2% drop from 2001. Upper middle income and high-income are less than 2% of the population.

9 in 10 Kenyan’s Poor/Low-Income

Essentially, this means that 93% of Kenyans are either poor or in the low-income bracket. In other words, for every 10 Kenyans, 9 are either poor or in the low-income bracket. The 9% decline of low-income, middle-income, and upper-middle-income populations and a corresponding 9% rise in the poor income population suggest that most Kenyans have become poorer since 2001.

Kenya’s population distribution by income

This negates the ‘Africa Rising” narrative sold to multinationals that have seen them set base, especially in Kenya to take advantage of the growing African middle-class. For Kenya, the middle-class is not growing. This declining middle-class can also be observed from the declining contribution of the wholesale and retail sector to Kenya’s GDP. The Economic Survey 2017 released recently by the Kenya National Bureau of Statistics shows that the contribution of the sector to GDP has been falling from 8.6% in 2014 to 7.9% in 2016.

But why would one think that Kenya’s middle class is rapidly growing? The facts lie in the way one defines the middle-class. The PewResearch report defines middle-income as a person living on $10-$20 a day (or Sh. 1,030 to Sh. 2,060). Other reports such as the African Development Bank (ADB) report define the middle class as any person living on $2-$20 per day. This definition essentially includes the low-income population who are mostly the majority.

Floating Class

Thus, it comes at no surprise that the ADB report found that 313 million African’s were middle-income earners having risen by 34% while that of East Africa was 29 million having grown by 23% with Kenya leading the pack at 44%. However, the report rightly acknowledges that “despite this phenomenon income, inequality in Africa remains very high, and that the overall middle-class figure includes large numbers of a ‘floating class’ whose hold on status is insecure.” On the other hand, a 2010 survey by Consumer Insight in Kenya showed that the middle class had declined from 27% in 2005 to 18%.

ADB Size of Africa’s Middle Class

The effects of a declining middle-class are observable in the empty shopping malls, retailers such as Deacons closing some branches and laying off workers, supermarket chains closing branches as sales decline, etcetera. If there was ever a growing middle-income class in Kenya, the rising cost of living has wiped out the gains and most of them are back in the low-income bracket.

The next government has its work cut out. Whether it will be Jubilee or NASA, bringing down the cost of living and creating more jobs for the growing population are essential ingredients to addressing many issues affecting Kenya. The health of the middle-class is the health of the economy. When the middle-income population declines, falling further into the poor or low-income bracket, it is an indicator of a failing economy.

I hope that the current election will focus on the real issues facing this country. I hope that electorate will focus on voting for the coalition that has their best interest at heart. This election must be different.

What is your opinion on the topic?
Fredrick Ombako

Fredrick Ombako is a research consultant at ResearchPro Solutions and Director at Bukas Accountancy & Consulting Limited. He consults mostly for NGOs and county governments by conducting research studies, Monitoring & Evaluation, and Project Management. You may reach him on 0721977108


Fredrick Ombako on FacebookFredrick Ombako on TwitterFredrick Ombako on Youtube
Article Tags:
· · ·
Article Categories:
KENYA · OPINION