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Economy

Kenya’s big non-working age group raises dependency rate

Workers at a textile factory in Athi River. Kenya has East Africa’s highest unemployment rate. FILE PHOTO | NMG
Workers at a textile factory in Athi River. Kenya has East Africa’s highest unemployment rate. FILE PHOTO | NMG 

Four in every five Kenyans are in the non-working age group, in what continues to pile pressure on the small working population in a country that leads the region in unemployment levels.

The World Economic Forum, whose annual meeting is ongoing in Davos, Switzerland, says that Kenya’s dependency ratio stands at 80.9 per cent. This is mostly due to a bulging youthful population that has not reached working age.

It terms the non-working demographic as those under 15 years and those over 65 years.

Kenya’s 80.9 per cent dependency level is high by world standards but pales in comparison to its neighbours like Uganda which has the highest dependency ratio in the world at 102.3 per cent.

Tanzania’s stands at 93.8 per cent, equivalent to nine dependents out of every 10 workers while Rwanda’s is 78.1 per cent, the lowest in the region.

Kenya, however, has the region’s highest unemployment rate, according to a last year’s report by the United Nations, meaning not all in the working-age group have jobs.

This means only a fraction of the working age population is forced to take care of the very young and the elderly as well as the unemployed adults, mostly fresh graduates.

The UN report says 39.1 per cent of the Kenyan population of working age are unemployed compared to Tanzania’s 24 per cent, Uganda’s 18.1 per cent and Rwanda’s 17.1 per cent.

The small working population is also hard pressed to pay for the pensions of retirees.

Treasury documents indicate that public pension bill is set to rise 29.1 per cent to Sh71.8 billion in the current financial year ending June. This marks the start of a series of sharp increments that will see taxpayers fork out Sh104.4 billion in 2019/20 to keep retired civil servants comfortable in old age.

The bill has continued to grow despite the decision eight years ago to raise the retirement age from 55 to 60 years.

The move was meant to slow down the number of retirees entering the pension pool and offer the government some headroom to set up a contributory pension scheme.

Dependency in Nigeria, the largest economy in Africa, is 87 per cent and 52 per cent in South Africa, according to the World Economic Forum report.

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