Include all in growth strategies, World Bank tells Kenya

The World Bank has challenged Kenya to adopt an inclusive growth strategy to pull millions of Kenyans from poverty.

In a newly released report titled The Kenya Poverty and Equity Assessment 2023: From Poverty to Prosperity: Making Growth More Inclusive, the World Bank says economic growth in the country could be  more inclusive.

The institution notes that historically, the country has been successful in translating economic growth into poverty reduction. This has seen poverty declining mostly before the COVID-19 pandemic.

“In 2019, almost one-third of Kenyans (33.6 per cent) were living below the national poverty line, a 13.1-percentage-point decline from 46.7 per cent in 2005/06,” reads part of the report.

World Bank says the  national poverty rate stood at 38.3 per cent.

 “Not only did poverty increase between 2019 and 2020, but the number of poor individuals also rose. Nationally, the increase was about 5.1 million; 2.6 million in urban areas and 2.4 million in rural areas. Although there was some recovery in 2021, the poverty rate remained above pre-pandemic levels, at 38.6 per cent,” the World Bank report says.  The report was released on December 14, 2023, in Nairobi.

The institution has raised concerns that the poor face twin challenges in the job market.  

“Fewer household members work and those that do are mostly engaged in low-productivity sectors,” says the bank. 

The report says the majority of the poor lack opportunities hence remaining inactive, especially in the rural areas.

World Bank adds that Kenya’s economic growth has the potential to pull more people out of poverty even in challenging economic contexts.

It has called for an inclusive growth strategy that boosts economic opportunity and productivity among the poorest.

The bank notes that the recent slowdown in the pace of poverty reduction calls for clear strategies that will see growth in poor people’s disposable income.

“More disposable income in the hands of more people, especially among those who are at the bottom of the income distribution, will create lasting pathways to prosperity.  Such widespread prosperity  is also good for the economy because it can translate into higher tax revenues and greater fiscal space but also support vibrant domestic demand and a strong private sector,” World Bank has advised.

“An inclusive growth strategy will accelerate poverty reduction and equalize opportunities through smart economic policies, and efficient and equity-enhancing public spending that enable the poor to better utilize their productive capacity,” the report adds.

The bank says three broad policy pathways can help Kenya make growth more inclusive and accelerate poverty reduction.

It has called for connecting the poor to economic growth and strengthening households’ resilience to shocks especially adverse weather shocks that mostly affect agriculture.

The bank has recommended availing better and timely data to monitor and assess progress in strategies being implemented for poverty reduction.

“In addition, connecting the poor to economic growth requires addressing the challenge of low education and skills among workers, especially workers who are poor and those in rural areas, as well as youth and women, along with improving access to productive jobs, and capital,” the report reads.

The bank adds that sector-wide and targeted policies for poor rural households must be tailored to the needs of agricultural households and those running rural non-farm enterprises.

These policies and interventions will build capabilities, provide access to finance, and connect households to the market.

Another recommendation is to shift away from input subsidies to farmers and focus more on removing market distortions alongside investing in key infrastructure, research and development.

Also recommended is making loans available at harvest time, tackling trader market power, practical farmer training and boosting of earnings of rural non-farm enterprises.

It has also called for expansion of paid work opportunities for the urban poor and streamlining of registration and licensing procedures.

The bank also wants boosting of earnings of household enterprises operated by poor households, with a particular focus on financial inclusion.

It also called for the strengthening of households’ resilience to adverse weather shocks. 

“Tackling the challenge of climate change is critical to ensuring sustained high rates of economic growth, a prerequisite for inclusive growth,” says the Bank.

The institution notes that by building on the existing Inua Jamii system, Kenya can improve the coverage, timeliness, and adequacy of its social protection system.

It has called for investment in comprehensive and inclusive disaster risk management. World Bank has also called for developing and disseminating climate-smart agriculture technologies and services to farmers. It says prioritizing poorer regions and farmers can enhance resilience.

The institution also calls for the building of inclusive institutions and systems in the country.

Strides by Kenya

The institution has, however, commended Kenya for making good progress, especially in inclusive education and maternal health.

World Bank says expanding access to health care has resulted in significantly improved health outcomes hence contributing to human capital achievements.

“For instance, the under-5 mortality rate in Kenya decreased from 74 deaths per 1,000 live births in 2008/09 to 41 deaths per 1,000 live births in 2022, significantly lower compared with its peers,” says the World Bank.

“Maternal mortality has also declined, owing to pregnant women having access to health services during their pregnancy and delivery, with almost all births being delivered by a skilled health provider. The HIV prevalence rate has also decreased,” adds the report.

World Bank notes that fewer households have children not in school and secondary school enrolment has significantly improved.