World Bank Report: Kenya ranks 10th for extreme poverty

DAR ES SALAAM: THE World Bank, a trustworthy source of information and data, says that Kenya is the 10th-poorest country in the world, with people living on less than 3 USD a day.

According to the World Bank/Our World in Data, Kenya ranks 10th globally for the percentage of people living on less than 3 USD a day. This picture of the list of nations analysed demonstrates that extreme poverty is mostly found in Sub-Saharan Africa, as seen in the table.

The top slots are mostly held by countries with low incomes and weak economies. War, bad government, slow industrialisation, and reliance on subsistence farming are just some of the reasons why so many people in countries like the Democratic Republic of the Congo (85.3 per cent of the population), Mozambique (82.2 per cent), Malawi (75.4 per cent), Burundi (74.2 per cent), and Zambia (71.7 per cent ) can’t get out of poverty.

Countries like Niger, Uganda, and Zimbabwe, which are all in the top half of the table, further illustrate how climatic vulnerability, political instability, and underdeveloped productive sectors are linked.

These economies have a high poverty rate all the time because they can’t leverage their plentiful natural resources or expanding populations into prosperity that is shared by everyone.

Kenya is a lower-middleincome country with fairly good services and financial systems and trade cooperation with other countries in the region. It ranks 10th with 46.4 per cent.

Still, about half of the population is affected. Economic improvement has not sufficiently reached households in rural and periurban areas, underscoring significant inequality and the informality of the job sector.

The data from WB provides a clear picture of the country’s poverty, what causes it, and, most significantly, what keeps these countries in their current situations.

The World Bank’s data in the IMF’s context report shows that Africa, especially Sub-Saharan Africa, has the highest rates of extreme poverty in the world. Countries such as Kenya, South Sudan, Burundi, the Central African Republic, Malawi, and Madagascar are often listed among the poorest, based on low GDP per capita (PPP) and high numbers of people living below the international poverty line.

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Conflict, climate shocks, and poor governance are major causes of this poverty. It’s not easy to summarise individual IMF poverty headcount reports for all African countries, but the data analysis shows that there are 111 million more people living in extreme poverty in Sub-Saharan Africa.

The good news is that Tanzania is not among them and the country has made significant progress in many areas of governance in line with the SDGs. For this example, I will focus my appraisal on Kenya, our neighbour, which has done well in the EAC economic union in the past.

I will try to figure out what might be keeping it from that position, even though its people live on less than 3 USD a day, while Tanzania has moved out of that category by getting rid of extreme poverty.

While others may have their own methods, my analysis examines structural, economic, policy, demographic, and institutional factors that shape the distinct paths of the two East African economies. Kenya and Tanzania are close to one another and want to work together more, but they have had different results in reducing poverty.

IMF data shows that Kenya is still among the top 10 countries where a major part of the population lives on less than USD 3 per day. Tanzania, on the other hand, does not fit the definition of an extremely poor country.

This difference prompts consideration of important factors such as the economy’s structure, policy choices, population pressures, governance, and how each country translates growth into reduced poverty.

Policymakers, development partners, and investors must understand this gap, as it underscores the interplay among macroeconomic strategy, labour markets, social policy, and institutional capacity that shapes human welfare outcomes.

A lot of people would agree with me that one of the most important ways to reduce poverty is economic growth that is open to everyone and changes the way things are done.

When you look at Kenya’s economy, you see that services, especially ICT (mobile money, outsourcing), finance and tourism, along with agriculture, have been the main drivers. Historically, there has been considerable GDP growth, but most of it has been in cities and the formal sector.

This has left many of the rural poor behind. Also, my analysis of Kenya’s GDP growth didn’t always align with job growth in sectors that create jobs. A lot of people in Kenya work in the informal sector, yet they don’t earn much money or do much work.

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Tanzania’s growth strategy has increasingly focused on agriculture, infrastructure investment, and natural resources, as its leaders have been strong and governance has improved in most areas of the economy.

A large part of Tanzania’s population works in agriculture, and the government has recently invested heavily in value addition. Tanzania made it easier for smallholder farmers to enter commercial agriculture by focusing public and private investment on rural infrastructure such as roads, irrigation, and electricity.

This led to higher production and income for people at the bottom of the income scale, raising most Tanzanians’ incomes to well over USD 3 a day. In this way, Tanzania has been able to translate economic growth into reduced poverty more quickly. Agriculture remains the most important way to reduce poverty in low-income nations, as it employs most of the poor and creates demand for local goods and services.

My evaluation shows that Kenya’s agricultural sector is characterised by fragmentation, vulnerability to climatic extremes (droughts and floods), and limited commercialisation among smallholders.

Many farmers grow food for their families, but they lack easy access to substantial loans, storage, or ways to add value for local people.

Market linkages are generally focused on highvalue cash crops such as tea and horticulture, which I think benefit a smaller, better-off group of farmers. In fact, problems with land tenure and tiny plot sizes in Kenya make it hard to take advantage of economies of scale.

Tanzania’s agricultural sector and recent reforms have focused on commercialising agriculture, providing extension services, giving farmers subsidies for inputs such as fertiliser and improved seeds, and improving rural infrastructure.

These changes have helped smallholder farmers become more productive, leading to increased sales of food and cash crops. Tanzania’s higher production has led to greater demand for rural workers and higher rural earnings, which is the main way to reduce poverty. Social safety nets and targeted poverty alleviation programmes make it easier to accelerate the eradication of poverty, especially for the most vulnerable people.

I think Kenya has made progress in social protection, including financial transfers for older people, orphans, and at-risk children. However, coverage has been limited in the past because budget constraints have hampered reach and effectiveness.

Targeting methods have struggled with inclusion and exclusion errors, making programmes less effective for people living on less than US$3 a day. Unemployment and underemployment are significant indicators of persistent poverty, especially among young people.

I think Kenya’s two fastest-growing industries, ICT and banking, are highly productive but don’t require many workers and mostly need people with more skills. At the same time, demographic pressures, such as a fast-growing population and a large number of young people, have outpaced the creation of well-paying jobs.

The National Bureau of Statistics says that many young people in Tanzania earn more than US$3 a day.

This is because the government has set up good systems. However, many young Kenyans still work in informal jobs that don’t pay much, earning less than USD 3 a day. My assessment has revealed that Tanzania’s Labour Market Absorption is on a different level.

Tanzania’s job market, while not without problems, has gradually added jobs in agriculture, rural services, and construction, often with the help of public projects and decentralisation. More equal labour absorption has occurred due to the growth of small-scale manufacturing and rural industries.

This variation in the quality and number of jobs created helps explain why poverty rates differ so widely. The quality of governance determines how effectively public resources are directed towards investments that help people escape poverty.

Kenya is still struggling with governance issues, including corruption and illegal money transfers, including the recent claim that US federal funds entered the Kenyan real estate market. I think these issues have made it harder to provide public amenities, especially in rural areas where poverty is highest.

Weak governance undermines confidence, discourages serious and strategic investment in areas that are falling behind, and makes public services less effective.

Tanzania still faces governance challenges, but changes in how money is managed, power is shared, and public services are delivered have made it easier to implement social and rural projects. Better control over spending on infrastructure and agriculture ensured that more public money went to programmes that helped people escape poverty.

So, Tanzania’s progress in eliminating severe poverty was helped by good governance and strong institutions. Unlike Tanzania, Kenya is unquestionably facing increasing fiscal pressures from debt servicing, high public wages, and contingent liabilities (e.g., state corporations).

In my view as an economist, this limits fiscal space for pro-poor spending and long-term development investments. When more budget funds go towards debt and recurrent costs, fewer resources are available for poverty-focused programmes.

Under President Samia of Tanzania, the country has maintained relatively controlled fiscal deficits, prioritising investment in roads, rural connectivity, energy, and agriculture—all areas with strong povertyreduction linkages. By safeguarding capital budgets that directly benefit productive sectors, Tanzania could promote more inclusive growth.

Sound macroeconomic management has enabled Tanzania to reduce inflation volatility, thereby protecting the real incomes of the poor, who are sensitive to food and energy price fluctuations.

It is widely acknowledged that infrastructure improves connectivity, reduces costs, enhances market access, and expands economic opportunities.

Although Kenya has made notable investments (e.g., the Standard Gauge Railway, believed to be highly financed at abovemarket costs), many rural areas still face constraints— poor feeder roads and inadequate storage facilities.

These gaps increase transaction costs and limit smallholder farmers’ and small businesses’ ability to access markets and services. Kenya is facing more financial problems than Tanzania because it has to pay off debt, pay high public wages, and deal with contingent liabilities (such as state-owned businesses).

In my opinion as an economist, this makes it harder for the government to spend money on programmes that help the poor and on long-term investments in development. When more money from the budget goes to debt and ongoing costs, there is less money available for programmes that help the poor. Tanzania’s president, Dr Samia, has kept the country’s budget deficits reasonably low.

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The government has focused on investing in roads, rural connections, energy, and agriculture, all of which are closely linked to poverty reduction. Tanzania should encourage more inclusive growth by protecting capital expenditure that directly supports productive sectors.

Tanzania’s strong macroeconomic management has helped lower inflation volatility, which preserves poor people’s real earnings, as they are particularly vulnerable to changes in food and energy prices. It is widely recognised that infrastructure makes it easier to connect people, lowers prices, opens up markets, and creates more economic opportunities.

Kenya has made several major investments, including the Standard Gauge Railway, which is thought to be well funded despite costs that are higher than the market average. However, many rural regions still face problems, such as poor feeder roads and insufficient storage space for local residents.

These gaps raise the cost of doing business and make it harder for smallholder farmers and small companies to access markets and services.

One important point that many people overlook is how changes in population size and structure affect measures of poverty. Kenya’s population expansion, especially among young people, has led to a large number of people of working age without enough jobs, resulting in high levels of underemployment and ongoing poverty.

The demographic dividend in Tanzania led to higher incomes and lower poverty, even though the country’s population pressures remained unchanged.

This was due to better rural labour absorption and higher agricultural output. Tanzania’s initiatives, such as land reforms and support for farmers, enabled more rural households to contribute productively to the economy.

I don’t have the right to tell Kenyans what to do, but the data suggest that the difference in severe poverty rates in Kenya isn’t due to bad luck or geography; it’s driven by policy choices, structural economic dynamics, and institutional effectiveness.

Tanzania’s focus on inclusive agriculture, rural infrastructure, pro-poor fiscal investment, and social security has helped many of its people move beyond survival on less than US$3 a day. My main point to Kenya is that progress is always a sign. Growth that doesn’t include everyone may raise GDP but leave most people behind, still below USD 3 a day