Poverty and Inequality
Our primary problem in Kenya today is poverty, poverty, and more poverty for the vast majority. This is a hard, sad fact of our society. The incidence of poverty in Kenya increased from 45 percent in 1990 to 56 percent in 2003 and has varies widely from 31 percent in one province to 65 percent in another of our eight provinces. Poverty profiles show different poverty levels by sector of employment, occupation, educational level, marital status, household size, gender of household head among many other parameters. Urban poverty has grown faster than that in rural areas. Currently, about 44 percent of the population of Nairobi lives in poverty. However, hardcore poverty is more widespread in rural than urban areas and has increased faster than overall poverty.
We have countless statistics measuring the problem. All statistics show that the situation is worsening and attempts to reduce absolute and relative poverty have not been successful.
I am convinced that in the absence of a comprehensive strategy to specifically address, reduce and eventually contain poverty, the situation will worsen. We must examine the impacts of all our economic policies with a view to achieving maximum impact on poverty.
Of equal concern is the growing inequality between the very poor and the very wealthy. We must remember though that inequality does not express itself only in terms of income. There are several bases of inequality and most of them are present in our country including inequalities in income, access to social welfare, labour market access to credit and infrastructure and many others. I submit that inequality cannot be ignored. Its presence is an expression of fundamental weaknesses in our economy and in our society at large.
Looking at the economy for the period 2001 – 2004, the major contributors to GDP included: the telephony and ICT sectors; horticulture; tourism; construction; the informal sector (incorporation into the national statistics); and the Nairobi Stock Exchange (NSE). The value of shares traded at NSE increased due to rising corporate profitability and investor optimism. Tourism and related activities in transport, hotels and restaurants and industry, has experienced much growth, but remains a fragile sector and is vulnerable to changes in the security situation.
We can see that highest growth areas only minimally affect the incomes of the majority of the population of Kenya. Such growth is clearly not pro-poor. Second, economic growth is high when agriculture (a leading sector in the economy – though one characterized by low productivity) is not negatively affected by poor weather conditions, yet this is only rare. Finally, several aspects of inequality restrict the spread of the benefits of economic growth across our society. Furthermore, we can clearly see that the economic growth experienced recently is clearly unsustainable due to diverse factors, such as adverse weather conditions and declining productivity in agriculture among others.
One of the first things we must do is to adjust economic policy such that greater emphasis goes to the growth of economic activities that affect the majority of the population, with special emphasis on activities that raise the standards of living of the poor through employment, higher incomes, and lower cost of living. Some of these details are outlined in my vision document but I want to single out the need to address rural poverty. We can achieve this through intensification of agriculture and agro-processing, better markets for agricultural inputs and products, better distribution channels, and stronger rural urban linkages. We can also take steps to foster domestic economic integration; that is develop strong local forward and backward linkages to create larger multiplier effects and enhance growth while reducing inequalities across the country. Without this, the Kenyan economy remains quite shallow and depends on procurement of inputs from foreign sources.
I must also stress the link between security and economic advancement. Insecurity in Kenya is a serious business environment problem. It is a major impediment to investment, enterprise development, entrepreneurship and even agricultural production. We have to stem insecurity as a precondition for economic growth and improved standards of living.
The unresolved issue of land ownership also directly affects our economy. What must be understood from the outset is that, at present, land is arguably the most important asset of our economic and our social and cultural wellbeing. Land occupies a central role as a source of employment and incomes with 80 percent of the population looking upon land for this purpose. We may talk of future industrialisation and diversification of employment through commerce and services. However, in the reality of today, the centrality of land to the economy cannot be ignored.
Kenyans are blessed with a huge land area of over 580,000 square kilometers. Present and past governments have pretended to pay attention to the land problems in Kenya. They have established committees and commissions to report on the matter but have failed to act on the recommendations of those commissions objectively. There is enough land in Kenya to suit the needs of everyone, but not enough to suit the greed of a few. The greatest problem with regard to land in our country concerns distribution and ownership. Many people are at once “landless” and “homeless” and in an economy so highly dependent on land ownership such people automatically become destitute. We must resolve the issue of land once and for all, no matter how painful it is. If we do not then we can forget about addressing the other fundamentals of our economy and the factors that have resulted in poverty.
