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Nairobi hosts a third of the fast-growing middle class

Middle class apartments. The private sector provides 80 per cent of the group. PHOTO | SALATON NJAU
Middle class apartments. The private sector provides 80 per cent of the group. PHOTO | SALATON NJAU 

Kenya’s middle class mainly lives in large cities with Nairobi taking the lion’s share of the population at 30.5 per cent, a new study shows.

The study of the income class by the Institute of Economic Affairs (IEA) Kenya says Mombasa is second at 11.1 per cent and Kisumu third at 3.1 per cent.

Other towns hosting the class include Nakuru (2.8 per cent), Eldoret (1.9 per cent) and Thika (1.8 per cent).

Urbanisation and the presence of service industries such as finance, insurance, construction and education have led to the concentration of the middle class in large towns, says the study.

“The middle class constituted of those earning between Sh76,392 to Sh102,429 in 2015 or Sh49,656 to Sh67,380 in 2009,” said IEA chief executive Kwame Owino during the launch.

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The middle class, according to the study, is primarily drawn from the formal sector comprising 272,569 employees as at 2015. Out of these, 63 per cent are male while 37 per cent are female revealing gender disparity in the class.

Some 74,337 employees who earn above Sh102,429 are classified as above the middle class. The report shows that the class is highly concentrated within service-based industries.

These sectors are financial and insurance at 28 per cent, supply of electricity, gas, steam, and air conditioning sectors at 24 per cent and global organisations such as UN agencies at 15 per cent.

Others are education at 10 per cent, manufacturing 11 per cent, wholesale and retail trade as well as repair of motor vehicles 13 per cent and construction 12 per cent.

Accommodation and food service activities comprise 14 per cent, information and communication 12 per cent and real estate activities 10 per cent.

There is, however, low concentration of the middle class in agriculture, water supply and sewerage industries at three per cent each.

The study used data from the Kenya National Bureau of Statistics (KNBS) to arrive at its findings.

There has been an increase in employment in formal and informal employment with the jobs standing at 10.9 million in 2009 and rising by 42 per cent in 2015.

Out of the 10.9 million employees in both sectors in 2009, 8.68 million were in the informal sector while 2.03 million were in the formal sector. The study’s findings reveal that majority of wage earners are in the low-income bracket and calls for harmonisation of incomes.

The study says individuals in the middle class pay relatively more pay as you earn (PAYE) tax compared to the national average. Annual PAYE contribution by the middle class as a share of the total national PAYE increased from 20 per cent in 2009 to 22 per cent in 2015, highlighting the taxation burden on Kenya’s middle class. “As the size is increasing gradually, so is the amount of PAYE contributed,” said Mr Owino.

The middle class contributed five per cent of the GDP over a seven-year period to 2015.

The study’s findings show that the private sector provides the bulk of the middle class, compared to the public sector, at 80 per cent.

It recommends that the government should work hand in hand with the private sector to create a conducive environment for job creation.

The study shows that the price of basic commodities has been rising, leading to the erosion of the middle class’ purchasing power.

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