Wide wealth gap leads to calls for pro-poor policiesSunday August 24 2014
Kenya’s wealth remains concentrated in the hands of a small segment of the population, earning East Africa’s largest economy a place among the world’s most unequal societies, the UN’s latest human development report shows.
The report, which was released last week, indicates that the incomes of the richest 20 per cent of the population rose steadily in the past decade to stand at 11 times more than the incomes of the poorest 20 per cent, leaving Kenya as East Africa’s second most unequal society after Rwanda.
The Human Development Index (HDI) 2014 says that despite improvement on incomes, access to healthcare and education, only a small portion of the Kenyan population has benefited directly from growth.
Each of Kenya’s 42 million citizens would earn Sh189,624 ($2,158) annually were total income distributed equally, the report says, but that is unlikely to happen any time soon as the rich continue to get richer, widening the gap between them and the poor.
The findings underline the many challenges facing President Uhuru Kenyatta’s government which, 15 months after taking power, has signalled its intention to follow his predecessor Mwai Kibaki’s path of spending big on infrastructure as a key plank of his economic management agenda.
Besides powering growth, Mr Kenyatta must grapple with the hard job of finding an effective formula for wealth distribution that can secure the country from the devastating effects of economic and social inequality.
The UN report says the income gap between the two extreme segments of the population (top and bottom) is smaller in three other East African Community member states – standing at 8.7 times in Uganda, 6.6 times in Tanzania and 4.8 times in Burundi.
Ranked by the Gini Coefficient – a measure of income gap that assigns zero to perfect equality and 100 to absolute inequality – Kenya’s score stands at 47.7 behind Rwanda’s 50.8, but 10 points above Burundi – the East African nation with the best wealth distribution with a score of 33.3 points.
Sweden, which is ranked among the world’s most equal society out of the 187 economies ranked, has a Gini Coefficient of 25 while Namibia, the world’s most unequal society, has a score of 63.7.
Overall, the UN ranks Kenya at position 147 globally with an HDI score of 0.535 for the period that ended December 2013.
The HDI is a statistical tool that the UN uses to measure a country’s achievements in social and economic spheres and is computed by tracking changes over time and comparing the scores across the globe.
Key HDI score components include the health of citizens, educational attainment and standards of living.
The UN report warns that Kenya’s poor HDI score, which has been improving at a slower pace, would slow down any efforts to move the country to the medium human development status that requires scores of 0.614 and above.
READ: 8,300 super-wealthy control two-thirds of Kenya’s economy
Kenya’s poor HDI ranking has seen economic experts call for intensification of measures that distribute the national cake to a large section of society.
“The need for equitable growth model is not unique to Kenya but is a challenge that faces even the developed economies,” said businessman Robert Shaw, adding that Kenya’s rate of growth is also too low to have an immediate impact on widespread poverty.
“There needs to be pro-poor policies and continuous investment in health and education to ensure that the benefits of economic growth trickle down to the bottom of the pyramid rather than being concentrated in the hands of a few people.”
Economists have previously blamed high-level inequality on the rapid emergence of service sectors which tend to concentrate high incomes on a few skilled individuals as opposed to labour-intensive manufacturing and agricultural sectors.
Stephen Wainaina, economic secretary at the Devolution and Planning ministry, said Kenya, which last year registered a modest growth rate of 4.7 per cent, is on the verge of a takeoff, having recovered from the aftershocks of electoral violence, erratic weather and global economic crisis.
“We are now in a better position to meet the second five-year development plan,” Mr Wainaina said at the launch of the UN Report in Nairobi last week. “For a start, we shifted our focus to a policy that demands much of the food we eat will henceforth be produced through irrigation, not the weather as has been the tradition.”
The UN report, however, shows that Kenya has progressed in all the three elements that make the HDI, realising improvements in education, life expectancy and income.
The country’s life expectancy at birth rose to 61.7 years in 2013 from 51.3 in 1990. Incomes grew by 32.5 per cent between 2010 and 2013, the UN data indicates.
The report shows that per capita income hit Sh189,624 last year, having risen from Sh184,527 in 2012 and Sh163,087 in 2005.
Progress has also been realised in education where 619,528 students are now enrolled in Form One out of the 828,528 pupils that sat the class eight exams the previous year.
Low transition from primary to secondary school, however, pulled down the average number of years of schooling, which stands at 6.3 years compared to seven years in 2010.
By comparison, Malaysia has a life expectancy of 75 years, an average of 9.5 years of schooling and a per capita income of Sh1,921,384 ($21,824).