Make workers more productive and see a drop in poverty

Joseph Karuri Kibogo harvests bananas at his 15-acre farm in Kandutura, Rongai, Nakuru County. [Kipsang Joseph, Standard]

The World Bank’s Kenya Poverty and Equity Assessment (2023) is a sober read.

The assessment documents the flagging fight against poverty and inequality. While growth was strongly correlated with poverty reduction between 2003-2015, the relationship has since weakened.

As a result, current growth not only translates into slower reduction of the number of Kenyans living in abject poverty but also contributes to rising inequality.

The reasons behind these developments are twofold. First, for much of the period before 2015 the agricultural sector was an important contributor of growth. Rising agricultural productivity turbocharged poverty reduction, in part, because the vast majority of Kenyans rely on the sector for their livelihoods.

Second, since 2015 the service sector has been the predominant growth engine. Yet high-paying services tend to be restricted to the higher end of the income ladder, with lower-income workers finding little opportunity to improve their productivity. Consequently, growth in the sector has resulted in little increase in incomes/consumption by those on the lower end of the economic ladder.

President William Ruto and his economic team should treat the World Bank report with the seriousness it deserves. Importantly, the report is a reminder that real economic development (and not just growth) will only be achievable once our economic policies target Kenyans where they work and live.

The simple implication here is that our road to economic prosperity must pass through agriculture – from irrigation, to research and extension services, to infrastructure, to well-regulated markets. There are no shortcuts. We must get agriculture right, especially the production of food crops that are the staples of our people.

Beyond agriculture, the other area that requires attention is manufacturing. Mass job creation in manufacturing is one of the surest ways through which countries escape the poverty trap.

With this in mind, government policy should target small, medium, and large manufacturing outfits with a view of making them grow. If agriculture has the benefit of touching the vast majority of households, manufacturing’s selling point is that it is a sector that can accelerate the productivity of Kenyans.

We will only return to the path of sustained poverty reduction if workers become more productive. This should be the singular motivation of all our economic planning, be it in agriculture, manufacturing, or service sectors.

-The writer is an associate professor at Georgetown University