Nairobi ranked 8th on World Bank list of rich, poor counties

A newly released World Bank report has ranked Kiambu as Kenya’s richest county and Mandera the poorest, casting doubts on the quality of official data that is used to share revenue among the 47 devolved units.

The report, which was published last week, shows that the county governed by William Kabogo has a gross domestic product (GDP) per capita of $1,785 followed by Nyeri ($1,503), Kajiado ($1,466), Nakuru ($1,413), and Kwale ($1,406).

Counties located in Kenya’s arid and semi-arid lands, including Mandera ($267), Bomet ($282), Elgeyo Marakwet ($293), Samburu ($298) and West Pokot with $307 dominate the bottom end of the list.

The findings of the World Bank survey differ sharply with the Commission on Revenue Allocation’s (CRA) June 2013 report, which listed the richest and poorest counties based on multiple national surveys.

The CRA named Kajiado as the richest county followed by Kirinyaga, Meru, Lamu and Kiambu, having relied on the poverty index as captured in the 2005 Kenya Integrated Household Budget Survey.

Turkana was the least endowed county with a poverty score of 67.5 followed by Mandera, Samburu, Marsabit and Wajir, according to the CRA report.

In providing the GDP per capita of each county, the World Bank has filled a huge data gap, which the CRA identified in its latest report as the missing piece of the jig-saw puzzle that is revenue sharing.

“Perhaps the most glaring omission is information on county contributions to Kenya’s GDP, which to date has not been disaggregated below the national level,” said the commission’s chairman Micah Cheserem in the latest report dubbed County Fact Sheets.

The core mandate of the Cheserem-led commission is to make recommendations on revenue sharing between the national and county governments.

The World Bank report is, therefore, expected to help shape the revenue sharing debate that has persisted in the Senate over the past four months, besides guiding investors where to take their money. 

“In addition to affecting how resources are shared, including the revenue sharing formula, the report can considerably affect resource allocation within individual counties,” the World Bank report says.

GDP per capita — national output divided by total population — is used as an indicator of economic performance and concentration of wealth in a given location but does not offer any insight into how that wealth is shared.

Nairobi 'overrated'

The report, however, dismisses the common belief that Nairobi, the capital, has the highest concentration of Kenya’s wealth – having clocked a per capita wealth of $1,081 to finish in eighth position, one spot ahead of Mombasa with a GDP per capita of $935.

The report puts Nairobi’s share of Kenya’s GDP at 12.7 per cent, dispelling the notion that the city accounts for more than 60 per cent of national output.

“This contribution is lower than commonly thought. This can have ramifications,” says the research paper, which calls for a rethink of the revenue sharing formula between the national government and the counties and within the counties.

The World Bank survey found that only a third or 15 counties have a GDP per capita that is above the national average of $694, highlighting the huge wealth disparities in the devolved units. The World Bank hopes that the wealth profiles should stir the CRA to rethink its revenue sharing formula which is based on population (45 per cent), equal share (25 per cent), poverty index (20 per cent), land mass (eight per cent) and fiscal responsibility (two per cent).

The survey also found that Kiambu is the second-largest contributor to the national wealth basket with 11.1 per cent followed by Nakuru (8.5 per cent) and Nyeri (3.9 per cent). Kilifi and Kajiado are tied at position five with 3.8 per cent each.

Businessman Robert Shaw said the report was ‘surprising’ and shows the overrating Nairobi has traditionally enjoyed.

“We need to re-evaluate how we allocate resources and where the opportunities are,” said Mr Shaw.

Kiambu’s wealth is derived from the fact that it hosts the large industrial town of Thika, and has lush coffee plantations and a booming real estate sector that houses a significant portion of Nairobi’s workers.

Nyeri, renowned for its production of black tea, is ranked top in terms of forex earnings while Nakuru is a manufacturing and agricultural hub.

Kwale, which is ranked a marginalised county by the CRA, made it to the top five wealthiest counties courtesy of tourism, minerals (titanium and rare earth) and agriculture (sugarcane).

“Such invaluable data is helpful for sound policy formulation,” said Mr Shaw.

Kariithi Murimi, a risk consultant and governance expert, said the county GDP data should help with the enforcement Article 203 of the Constitution, which calls for incentives to optimise the potential of every county.

“GDP per capita gives an indication of the purchasing power within the counties. Most industrialists look at this when locating their factories,” said Mr Murimi.

The World Bank report does not incorporate Kenya’s updated national accounts, which resulted in a one-quarter jump in the size of GDP to Sh5.35 trillion and pushed the country’s GDP per capita to Sh124,709.60 in an exercise technically referred to as rebasing.

The World Bank report is authored by Apurva Sanghi, a lead economist at the World Bank, geographic information systems (GIS) expert Laban Maiyo and Tom Bundervoet, a senior economist at the bank’s Kigali office.

The Bretton Woods institution used the night lights approach to estimate the economic activity in the counties, which was then summed up with agricultural output, to measure the wealth of each of Kenya’s 47 devolved units.

The method involves use of satellite imagery to capture economic activity, which assumes a correlation between nightlights and consumption as well as investment activities.

“In recent years, the intensity of nightlights as measured from space has been used to estimate economic activity,” reads the report.

For example, Kenya’s growth of nightlights was recorded at 4.0 per cent between 2000 and 2012, nearly the actual annual GDP growth rate of 4.2 per cent recorded during the period.