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TABLE OF CONTENTS ABBREVIATIONS ........................................................................................................................................................................................................................................................... i ACKNOWLEDGEMENTS........................................................................................................................................................................................................................................... ii EXECUTIVE SUMMARY............................................................................................................................................................................................................................................. iii THE STATE OF KENYA’S ECONOMY 1. Recent Economic Developments ............................................................................................................................................................................................................... 2 1.1 The global and regional economy................................................................................................................................................................................................... 2 1.2 Recent developments in Kenya ........................................................................................................................................................................................................ 2 1.3 The real economy ...................................................................................................................................................................................................................................... 3 1.4 External sector.............................................................................................................................................................................................................................................. 5 1.5 Monetary and financial sector performance............................................................................................................................................................................. 7 1.6 Fiscal developments ................................................................................................................................................................................................................................ 8 2. Outlook and Risks .................................................................................................................................................................................................................................................. 11 2.1 Outlook ........................................................................................................................................................................................................................................................... 11 2.2 Downside risks ........................................................................................................................................................................................................................................... 13 SPECIAL FOCUS 3. Women's Economic Empowerment: Key to Unlocking Kenya's Inclusive Growth.................................................................................................. 16 3.1 Economic empowerment of women is a key opportunity for Kenya’s inclusive growth............................................................................ 16 3.2 The Government of Kenya has shown a strong commitment to advancing women's economic empowerment.................... 17 3.3 Significant gender gaps in economic outcomes persist.................................................................................................................................................. 18 3.4 The persistent gender economic gaps are shaped by several interdependent factors that manifest across the life cycle... 25 3.5 A multisectoral approach is needed for lasting change................................................................................................................................................... 32 LIST OF FIGURES Figure 1: Revenue projections for FY25 have been revised downwards................................................................................................................................ 3 Figure 2: Industry contributions to GDP growth................................................................................................................................................................................... 4 Figure 3: Absolute poverty rate, 2005/06 – 2022................................................................................................................................................................................... 4 Figure 4: Absolute poverty rate by county, 2022................................................................................................................................................................................... 4 Figure 5: Unemployment rates compared against peer countries, 2021............................................................................................................................... 5 Figure 6: Unemployment and underemployment rates, 2021..................................................................................................................................................... 5 Figure 7: The current account deficit narrowed, supported by higher agricultural exports and resilient remittances............................ 5 Figure 8: Financial inflows remained constrained................................................................................................................................................................................. 6 Figure 9: Growth in tourism arrivals (3-month moving average)................................................................................................................................................ 6 Figure 10: Official reserves remain sufficient and now above the statutory minimum................................................................................................... 6 Figure 11: The shilling has stabilized against the US dollar since February 2024................................................................................................................. 6 Figure 12: Inflation eased and remained below the target midpoint......................................................................................................................................... 7 Figure 13: Credit to private sector declined amid high interest rates and exchange rate effects on foreign currency loans ���������������� 8 Figure 14: Banks asset quality declined as NPLs continued to increase.................................................................................................................................... 8 Figure 15: First supplementary of FY2024/25 – Development expenditure bore the burden of spending cut.............................................. 9 Figure 16: Deviations in fiscal deficit targets put pressure on the debt burden ................................................................................................................. 9 Figure 17: Increased domestic borrowing pushed Kenya’s yield curve upward.................................................................................................................. 10 Figure 18: The risk of external debt distress is assessed high following sustained breaches of sustainability thresholds by solvency and liquidity indicators under the baseline scenario .................................................................................................................................. 11 Figure 19: Share of NEET in Kenya by age group and gender, 2022................................................................................................................................................ 19 Figure 20: Employment shares by gender....................................................................................................................................................................................................... 19 Figure 21: Share of employment by occupation......................................................................................................................................................................................... 20 Figure 22: Unpaid employment ............................................................................................................................................................................................................................ 21 Figure 23: Percentage of time spent per day on unpaid domestic and care work by sex and age............................................................................. 21 Figure 24: Difference between men’s and women’s earnings, by area of residence, education level and age .................................................. 22 Figure 25: Difference between men’s and women’s earnings............................................................................................................................................................. 22 Figure 26: Share of women and men by ownership of assets............................................................................................................................................................. 23 Figure 27: Activity outcomes, ASAL vs non-ASAL counties................................................................................................................................................................... 23 Figure 28: Share of men and women aged 18-64 years who are employed............................................................................................................................. 24 Figure 29: Highest educational level attained among individuals aged 25-64 years........................................................................................................... 25 Figure 30: Evolution of ECD outcomes in Kenya.......................................................................................................................................................................................... 26 Figure 31: Highest educational level attained by age group and selected demographics, 2022................................................................................. 26 Figure 32: Share of uneducated population by age group and gender, 2022.......................................................................................................................... 27 Figure 33: Marital and parental status by age and gender.................................................................................................................................................................... 28 Figure 34: Teenage pregnancy in Kenya, 2022.............................................................................................................................................................................................. 28 Figure 35: Share of currently married women aged 15-49 reporting not participating in specific decisions....................................................... 29 Figure 36: Gender-based violence in Kenya, 2022...................................................................................................................................................................................... 29 Figure 37: Share of women circumcised by county................................................................................................................................................................................... 30 LIST OF TABLES Table 1: Key economic indicators and forecast, 2021 to 2026 (percent, unless otherwise stated).................................................................................. 13 Table 2: Key policy priorities to address Kenya’s underlying structural challenges ................................................................................................................... 14 Table 3: Enhancing girls’ and women’s economic empowerment framework: priority action areas across the lifecycle �������������������������������� 32 LIST OF BOXES Box 1: Social and political protests against the FY24 Finance Bill........................................................................................................................................................ 3 Box 2: Kenya's latest poverty data: Persistent disparities in welfare and employment.......................................................................................................... 4 Box 3: Opportunities for effective infrastructure public-private partnerships............................................................................................................................. 7 Box 4: Budget credibility and fiscal slippages .............................................................................................................................................................................. ������������������ 9 Box 5: Women experience a higher burden of unpaid care work ................................................................................................................................... ������������������ 21 Box 6: Using regression models to examine the economic impacts .............................................................................................................................................. 31 ABBREVIATIONS AfCFTA African Continental Free Trade Area KSh Kenya Shilling ALMPs Active Labor Market Programs KYEOP Kenya Youth and Opportunities Project ASAL Arid and Semi-Arid Land m/m Month-on-Month bbl Barrel of crude oil MPC Monetary Policy Meeting CBK Central Bank of Kenya MTP Medium-Term Plan CBR Central Bank Rate NEET Not in Education or Employment EAC East African Community NGEC National Gender and Equality Commission EMDEs Emerging Market and Developing NPLs Non-Performing Loans Economies NYOTA National Youth Employment and EPAG Economic Empowerment of Opportunities Towards Advancement Adolescent Girls PMI Purchasing Managers Index EU-EPA European Union Economic Partnership PV Present Value Agreement Q1, Q2, First quarter, second quarter, third quarter, FDI Foreign Direct Investment Q3, Q4 Fourth quarter FGM Female Genital Mutilation SRH Sexual and Reproductive Health FY Financial Year SSA Sub-Saharan Africa GBV Gender-based violence STEM Science, Technology, Engineering and GDP Gross Domestic Product Mathematics GoK Government of Kenya UNICEF United Nations Children's Fund ICT Information and Communication US$ United States Dollar Technology WBL Business and the Law IMF International Monetary Fund WEE Women's Economic Empowerment KDHS Kenya Demographic and Health Survey y/y Year-on-Year KNBS Kenya National Bureau of Statistics December 2024 | Edition No. 30 i ACKNOWLEDGEMENTS The Kenya Economic Update (KEU) is a World Bank report series produced twice a year that assesses recent economic and social developments and prospects in Kenya, and places these in a longer-term and global context. Through special topics, the KEU also examines selected policy issues and medium-term development challenges in Kenya. It is intended for a wide audience, including policymakers, business leaders, financial market participants, and the community of analysts and professionals engaged in Kenya’s changing economy. The production of the KEU is led by the Macroeconomics, Trade and Investment (MTI) Global Practice team for Kenya. The first part – Recent Economic Developments and Outlook and Risks – was produced by Naomi Mathenge, Angélique Umutesi, Jorge Tudela Pye and Stanley Mutinda (all MTI) and logistical support from Anne Khatimba. The second part – Special Topic on Women's Economic Empowerment: – was produced by the Education, Poverty and Equity, and Social Protection Global Practice teams for Kenya. The team comprised Precious Zikhali, Lorena Torres, Shubha Chakravarty, Pedro Cerdan-Infantes, Nduati Kariuki, Phyllis Machio, Stephen Okiya, and Federica Ricaldi. Other contributors include Mits Motohashi, Nathan Rono Tuimising, Maina Gachoya and Grace Njeru. Vera Rosauer and Keziah Muthembwa managed communication and dissemination while Robert Waiharo helped with the design. Logistical assistance during the preparation of this report was provided by Anne Khatimba. The report was prepared under the overall guidance of Abha Prasad (Practice Manager, MTI), Rinku Murgai (Practice Manager, Poverty and Equity), Meskerem Mulatu (Practice Manager, Education), Suleiman Namara (Practice Manager, Social Protection), Marek Hanusch (Program Leader, Equitable Growth, Finance and Institutions for Kenya, Rwanda, Somalia and Uganda), Hassan Zaman (Regional Director for Eastern and Southern Africa), Qimiao Fan (Country Director for Kenya, Rwanda, Somalia and Uganda) and Anne Margareth Bakilana (Manager, Operations, for Kenya, Rwanda, Somalia and Uganda). The report benefited from excellent peer reviews from Samer Naji Matta (Senior Economist) and Ana Maria Munoz Boudet (Senior Economist) as well as comments from Tom Bundervoet (Lead Economist, Poverty and Equity). The report benefited from valuable regular discussions with officials at the National Treasury, Central Bank of Kenya, the Kenya National Bureau of Statistics and the International Monetary Fund. The findings, interpretations, and conclusions expressed in this report do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. For questions about this report please email nmathenge@worldbank.org. For information about the World Bank and its activities in Kenya, please visit: https://www.worldbank.org/en/country/kenya ii December 2024 | Edition No. 30 EXECUTIVE SUMMARY The global economy is stabilizing, with moderate growth Fiscal consolidation continues to be key to sustain projected to continue through 2025-26. Global growth inclusive growth going forward. The improved reached 2.6 percent in 2023 and is expected to remain macroeconomic environment is heavily reliant on Kenya’s steady in 2024 before slightly increasing in the subsequent sustained ability to meet its fiscal consolidation targets; years. This improvement is supported by declining inflation, nevertheless, continuous fiscal slippages risk the progress a recovery in trade, and easing financial conditions despite made. While the fiscal deficit narrowed slightly from 5.6 ongoing geopolitical tensions and high interest rates. percent of GDP in FY2022/23 to 5.3 percent in FY2023/24, it Commodity prices are expected to continue their declining remained above target of 4.7 percent of GDP due to lower- trend despite still being above pre-pandemic levels, with than-expected revenue and rising debt service costs. Total a decline in 2023 and continued their downward trend in revenue increased modestly to 17.2 percent in FY2023/24 2024. Regional prospects in Sub-Saharan Africa (SSA) are from 16.7 percent in the previous FY, driven by higher VAT more optimistic, with real GDP growth forecast to reach and departmental fees, but still fell short of expectations. 3 percent in 2024, accelerating to 4 percent by 2025-26, Government expenditure grew, with a large portion of driven by falling inflation and stronger private investment, revenue allocated to debt servicing, leaving little room for though challenges like high debt levels persist. social and developmental spending. This ongoing fiscal pressure continues to hinder the government's ability to Kenya’s macroeconomic environment improved in 2024, reduce the deficit and achieve long-term fiscal sustainability. following a tighter macroeconomic policy framework. While inflation is receding, from a high of 6.9 percent in Kenya’s debt remains sustainable although the country January to 2.8 in November 2024, the Kenyan shilling has is classified in high risk of debt distress. Kenya saw a stabilized after appreciating by almost 20 percent earlier slight reduction in the debt-to-GDP ratio, largely due to in the year and is one of the best performing currencies the appreciation of the shilling, which reduced the value in emerging market and developing economies (EMDEs). of external debt in local currency terms. The country International reserves are now assessed as adequate, continues to face high risks of debt distress, with several reaching US$9,007 million, its highest number in the last key debt sustainability indicators remaining above the two years, and above the Central Bank of Kenya’s statutory critical thresholds. Domestic debt now represents a larger requirement of 4.0 months of import cover. Improved share of the total debt portfolio, reflecting increased external conditions, a stronger macroeconomic policy reliance on high-interest domestic borrowing to meet framework, and support from International Financial financing needs. While the government has made efforts Institutions allowed for the February 2024 bond issuances to shift towards concessional external loans and longer- – the Eurobond and infrastructure bond – which restored term domestic securities to manage refinancing risks, debt confidence in Kenya’s markets and in its ability to finance servicing costs continue to be high and rising, placing itself to repay its debt obligations. additional pressures on fiscal space and limiting resources available for essential public services. Still, GDP growth is decelerating as Kenya faced a multiplicity of challenges during the year. Severe floods The external sector has shown signs of improvement, experienced in the country in April 2024, subdued business with a narrowing current account deficit, driven by sentiment following the mid-2024 protests, and reduced higher goods exports and resilient remittances. Goods public spending amid ongoing fiscal consolidation export saw a 2.8 percent increase in the year to August efforts are weighing on headline growth and the overall 2024, with tea and horticulture exports performing well, macroeconomic performance for Kenya in 2024. Real GDP although manufactured goods exports declined by 4 expanded by 5 percent during the first quarter (Q1-24) percent. Services exports, particularly from tourism, have and by 4.6 percent during the second quarter (Q2-24), been weak, with tourism receipts falling. On the positive compared to 5.6 percent for the full year of 2023. These side, remittances increased by 10.7 percent, supporting figures are closer to Kenya’s pre-pandemic average (4.6 FX inflows. Kenya’s foreign reserves have been increasing, percent per year in 2011-2019) and its potential growth providing coverage above the statutory requirement of (which the World Bank estimates at 4.7 percent). four months of imports. The shilling has remained stable since the sharp appreciation of February 2024, supported by a strong reserve position in 2024 relative to 2023. December 2024 | Edition No. 30 iii Executive Summary The tight monetary policy framework contained progressive legal and policy framework; however, inflation, bringing it down to 2.8 percent by November significant gender gaps in economic outcomes persist. 2024. Private sector credit growth is slowing down, While the Constitution promotes gender equality across all reflecting higher interest rates, reduced demand for spheres, and national plans like Kenya Vision 2030 stress the loans, and crowding out by government borrowing. need for equal access to opportunities, challenges remain. Non-performing loans (NPLs) increased to 14.3 percent, Young women are more likely to be neither in education, signaling rising credit risks. The CBK reduced the Central employment, nor training (NEET). Women report lower Bank Rate (CBR) in the last three Monetary Policy meetings employment rates than men, regardless of location, age, (MPC)—from 13.0 percent in August 2024 to 11.25 percent or education. In addition, women face higher rates of in December 2024. Despite challenges, the banking unpaid labor, wider earnings gaps, and disparities in asset sector remains well-capitalized with strong liquidity, and ownership. These inequalities are especially pronounced profitability continues to grow, offering resilience amid in rural and ASAL – arid and semi-arid lands – areas, economic headwinds. contributing to the country's regional disparities. In the medium-term, economic growth is projected Persistent gender economic gaps in Kenya are driven by to gradually recover, although structural imbalances a complex interplay of factors across the life cycle. Key hinder Kenya’s ability to create more and better jobs for areas such as early childhood development, education, its population. Supported by private investment, export age at family formation, sexual and reproductive health, growth, and consumer spending, growth is expected and social norms are central to understanding women’s to pick up from the estimated 4.7 percent in 2024 to economic outcomes. While improvements in early 5.1 percent on average in 2025-2026. The agriculture childhood development have laid a foundation for better and services sectors will continue to drive economic socioeconomic outcomes, challenges in quality and expansion, though the overall pace of growth will depend equity remain. Despite progress in education, women still on how well the government manages fiscal reforms and lag behind men, particularly in rural and ASAL areas. Early addresses rising debt levels. To sustain inclusive growth marriage and parenthood exacerbate gender disparities with more and better jobs, Kenya should address structural in economic participation and earnings, with girls in ASAL challenges, including ones related to fiscal sustainability, counties and poorer backgrounds facing earlier family governance, weakening exports, lagging productivity responsibilities. Social norms not only impact women’s growth, and increased frequency and intensity of climate sexual and reproductive health but also limit their shocks. Key risks to the outlook include further fiscal economic potential. slippages, extreme weather events, and external economic challenges. On the upside, successful implementation of Achieving lasting progress in women’s economic structural reforms and an improved global economic empowerment requires a comprehensive, multisectoral environment could strengthen the outlook, though fiscal approach that addresses the interconnected challenges discipline and prudent debt management will remain women face throughout their lives. This approach critical for long-term stability. should focus on: (i) building women’s human capital by improving education access and quality, especially Broadening economic participation through women’s in disadvantaged counties; (ii) addressing social norms economic empowerment is essential for easing Kenya’s and protecting human capital by addressing teenage socioeconomic pressures. Empowering women—enabling pregnancies and early marriages; (iii) enhancing them to actively participate in, control, and benefit from access to economic opportunities and leadership by income-generating activities, while also building their facilitating school-to-work transitions and better job voice and agency—presents a powerful opportunity to access; and (iv) tackling gender-based violence (GBV) boost productivity and foster inclusive growth. Recent through early interventions in schools and for out-of- evidence shows that closing gender gaps in education school adolescents. A successful strategy also relies on and labor market access could increase Kenya’s GDP by up timely, high-quality sex-and-gender-disaggregated data, to 10 percent. Women’s economic empowerment drives including information on vulnerable populations such gender equality, reduces poverty, boosts government as the poor, women in ASALs, and refugees. This data revenues, and improves social outcomes, including better is crucial for developing effective policies and tracking education and health for families. It also helps address progress toward women’s economic empowerment. regional disparities and promotes more equitable growth. Promoting women’s economic empowerment does not mean leaving men behind; correcting economic gender The Government of Kenya is committed to advancing imbalances benefits everyone and contributes to the women’s economic empowerment through a county's overall development. iv December 2024 | Edition No. 30 The State of Kenya’s Economy Photo: ©Bonney Tunya/World Bank The State of Kenya’s Economy 1. Recent Economic Developments 1.1 The global and regional economy in China, the price of iron ore is expected to decrease. Food The global economy is stabilizing as financial conditions prices are forecast to decrease by 8.4 percent in 2024 and improve, inflation moderates, and trade recovers. Global 4 percent in 2025, as prices of grains fall, driven by strong growth reached 2.6 percent in 2023 and is projected supply. These events are contributing to a decline in global to hold steady in 2024, before slightly increasing to 2.7 inflation, which is expected to continue in 2024-25 but will percent in 2025-26. The global economic outlook has been remain above its pre-pandemic average beyond 2024).2 improving, as global inflation continues its decline while international trade recovers, supported by a rebound Economic activity is expected to rebound in Sub- in the global demand for goods. Moreover, despite Saharan Africa (SSA) during 2024, as falling inflation geopolitical tensions and still relatively high interest rates, raises the purchasing power of households in the global financial conditions are easing. Softening labor region. Real GDP growth is expected to reach 3 percent markets and declining core inflation prompted the U.S. during this year and accelerate further to 4 percent in Federal Reserve to cut its policy rate by 50-basis points in 2025-26. Decreasing inflation, improving external financial September, supporting expectations of further cuts in U.S. conditions, and expectations for additional monetary interest rates. The USA is expected to grow by 2.5 percent policy rate cuts are boosting business sentiment and, thus, this year and moderate to 1.6 percent in 2025, diverging private investment, with an expectation that these trends from the euro area, which will continue to see weaker continue in 2025. However, real incomes per capita are growth during the forecasted period (0.7 percent in 2024 expected to grow by only 0.5 percent this year, below by 2 and 1.4 percent in 2025-26). Economic activity in China is percent the 2019 levels and still insufficient to significantly expected to continue its downward trend and reach 4.8 contribute to poverty reduction. Moreover, although fiscal percent GDP growth in 2024 and between 4.0-4.1 percent balances continue to improve in the region, elevated debt in 2025-26, driven by a sluggish domestic demand and burdens continue to challenge many African countries. weaker investment outlook. These events are expected Total debt services are still high, restricting fiscal space for to slow down EMDEs growth, which is projected to reach other growth-enhancing investments and tackling the 4.0 percent in 2024 and maintain relatively flat during the increasing frequency and intensity of climate shocks.3 2025-26 horizon.1 1.2 Recent developments in Kenya Commodity prices are expected to continue their Kenya’s macroeconomic environment improved in declining trend over the forecast period. Despite still 2024, following a tighter monetary policy framework. being above pre-pandemic levels, commodity prices fell While inflation is receding, from a high of 6.9 percent in in 2023 and continued their downward trend in 2024. January to 2.8 in November 2024, the Kenyan shilling Energy prices decreased in September, following a 3 has stabilized after appreciating almost by 20 percent percent drop in August (m/m) and are expected to decline earlier in the year and is one of the best performing by 5.7 percent during 2024. Brent crude oil prices fell to currencies in EMDEs. International reserves are now US$74/bbl in September 2024, below its 2023 prices, but assessed as adequate, reaching US$9,007 million, its are expected to increase to around US$80/bbl by the end highest number for the last two years, and above the of the year amid increasing geopolitical tensions and a Central Bank of Kenya’s statutory requirement of 4.6 tight supply-demand balance. The metals price index is months of import cover. Improved external conditions, expected to see little change in 2024-25. On one hand, a stronger macroeconomic policy framework, and efforts to reduce global carbon emissions is accelerating support from International Financial Institutions allowed demand for various metals and minerals that are crucial for the February 2024 bond issuances – the Eurobond to the energy transition. Gold prices are increasing driven and infrastructure bond – which restored confidence in by stronger demand from Central Banks and geopolitical Kenya’s markets and in its ability to finance itself to repay tensions; however, as construction demand falls, especially its debt obligations. 1 Source: Global Economic Prospects, June 2024). 2 Sources: Commodity Markets Outlook, October 2024. 3 Source: Africa Pulse, #30. 2 December 2024 | Edition No. 30 The State of Kenya’s Economy However, progress on fiscal consolidation remains slow On the supply side, albeit slowing, the agricultural and given Kenya’s fiscal and debt vulnerabilities. Severe services sectors continue to show resilience. During floods experienced in the country in April 2024, subdued Q2-24, agriculture grew by 4.8 percent y/y, compared to business sentiment following the mid-2024 protests, 7.8 percent in Q2-23 and 6.5 percent in 2023; the cyclical and reduced public spending amid ongoing fiscal rebound experienced in 2023 after two consecutive years of consolidation efforts are weighing on headline growth drought is waning. Tea production fell by 0.6 percent during and the overall macroeconomic performance for Kenya the quarter; however, favorable weather conditions are in 2024. The improved macroeconomic environment is keeping the broader sector resilient. The April 2024 floods heavily reliant on Kenya’s sustained ability to meet its fiscal severely affected the livelihood of households, mostly in consolidation targets. urban areas, limiting growth in private consumption. Moreover, albeit still high, the accommodation and 1.3 The real economy restaurant subsector saw a pronounced deceleration Despite overall improved macroeconomic conditions, in growth, from 42.7 percent in Q2-23 to 26.6 percent, Kenya’s GDP growth has been decelerating in 2024, as growth in tourist arrivals and overall travel receipts following a strong cyclical rebound in 2023. Real GDP decelerate (Figure 10 in Section 1.4). Consequently, expanded by 5.0 percent during the first quarter (Q1-24), services growth slowed down to 5.5 percent in Q2-24, year-on-year (y/y), and by 4.6 percent during the second after 5.9 percent in Q2-23 and 7.0 percent in 2023. quarter (Q2-24), compared to 5.6 percent for the full year of 2023. These figures are closer to Kenya’s pre-pandemic Industry has been losing momentum. The sector grew average (4.6 percent per year in 2011-2019) and its by 0.6 percent in Q2-24 y/y and 0.1 percent in Q1-24, well potential growth (which the World Bank estimates at 4.7 below what was already a relatively slow annual growth percent). Compared to 2023, leading indicators show that rate of 1.9 percent in 2023. Weaker housing demand, amid growth momentum remained softer through Q3. higher real interest rates, partly explain the weakening of Box 1: Social and political protests against the FY24 Finance Bill The 2024 Finance Bill, intended to help reduce Kenya’s fiscal deficit, sparked social protests. Kenya’s revenue performance has deteriorated over the past years, falling from 17.5 percent of GDP in 2018/19 to 16.9 percent in 2023/24, far from the East African Community’s convergence criterion of 25 percent. Revenue collections below target have also delayed Kenya’s fiscal consolidation process, putting pressure on the public deficit and public debt. To raise additional revenue, the government introduced new revenue measures through the 2024 Finance Bill which sparked protests against higher taxes in light of high cost of living, lack of Jobs and entrepreneurship opportunities for the youth, and declining disposable incomes. Although the Bill was passed in parliament, President Ruto did not ascent to it in light of the protests. The rejection of the Finance Bill required a supplementary budget in August 2024, which reduced the FY25 revenue projections by Figure 1: Revenue projections for FY25 have been revised 1.6 percentage points of GDP. downwards Income tax VAT Import duty Excise duty Non-tax revenue Grants The efficiency of spending comes into focus. The 20.0 0.3 government introduced alternative revenue measures 18.0 3.8 0.3 16.0 into parliament; weaker revenue performance will 3.7 14.0 2.4 need to be offset by expenditure efficiencies to stay on Percent of GDP 12.0 1.0 1.8 the fiscal consolidation path. Supplementary budget 10.0 0.9 4.5 I introduced budget cuts which, to be sustainable 8.0 4.0 with limited impacts on service delivery, require 6.0 complementary improvements to the transparency, 4.0 6.8 6.5 2.0 equitability, and efficiency of spending. The Conflict-of- 0.0 Interest Bill, under consideration in parliament, coupled Approved budget First supplementary budget with the government’s efforts to roll out e-procurement FY2024/25 FY2024/25 are among the areas for sustainable fiscal savings. Source: National Treasury and staff calculations December 2024 | Edition No. 30 3 The State of Kenya’s Economy construction; the sector contracted by 2.9 percent during Figure 2: Industry contributions to GDP growth Q1-22 to Q2-24, y/y Q2-24 and negatively contributed to headline growth by Mining and quarrying Manufacturing Electricity and water supply Construction 0.2 percentage points as cement consumption, imports 1.0 of iron and steel, and credit to construction firms also 0.8 plummeted. Manufacturing expanded by 3.2 percent 0.6 Percentage points y/y during Q2-24, driven by growth in the subsectors of 0.4 soft drinks, sugar, and milk. Leading indicators suggest a potential slowdown in Q3-2024. While credit to 0.2 manufacturing firms fell by 0.5 percent during the period, 0.0 business sentiment plummeted after the mid-2024 -0.2 protests; the Purchasing Managers Index (PMI) contracted -0.4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 both in June and July and continued decelerating in 2022 2023 2024 September 2024. Source: Kenya National Bureau of Statistics. Box 2: Kenya's latest poverty data: Persistent disparities in welfare and employment Kenya’s poverty levels worsened in 2022, with disproportionate impacts in rural areas, highlighting the country's incomplete recovery from shocks. The national poverty rate increased to 39.8 percent in 2022, up from 38.6 percent in 2021, driven by a significant 2.2 percentage point rise in rural areas even as urban poverty showed modest improvement (Figure 3). Kenya continues to suffer from shocks in the post-COVID period with a prolonged drought having affected rural areas and arid counties in particular during 2022. The effect of these shocks has resulted in poverty rates remaining 6 percentage points above pre-COVID levels across both rural and urban areas, translating to 4 million additional Kenyans living in poverty in 2022 compared to 2019. Inequalities and challenges in labor market integration persist across regions and demographic groups, with particular challenges in Kenya's arid areas. The north and northeastern counties have the highest poverty rates (Figure 4). These rates have been consistently higher than the rest of the country reflecting deep-rooted challenges including low agricultural productivity, heightened vulnerability to climate shocks, and limited access to basic services and employment opportunities. In these areas, 73 percent of females are NEET (compared to 42 percent of males), indicating severe barriers for women to access economic opportunities. In addition to the regional disparities, female- headed households also face a 3-percentage point higher likelihood of being poor nationally and across both urban and rural settings in 2022. The recent wave of protests has affected especially youth in urban areas, where unemployment rates are higher and inequalities visible. Figure 3: Absolute poverty rate, 2005/06 – 2022 Figure 4: Absolute poverty rate by county, 2022 National Rural Urban 60 49.7 50 43.5 42.9 46.7 38.8 42.9 40.7 40 37.0 41.7 39.8 Percent 34.5 36.1 38.6 30 33.6 34.1 33.2 29.4 26.0 20 60 - 100 10 50 - 60 40 - 50 30 - 40 20 - 30 0 10 - 20 2005/06 2016/16 2019 2020 2021 2022 Source: Based on Kenya Integrated Household Budget Surveys and Kenya Continuous Source: 2022 Kenya Continuous Household Survey Household Surveys Geographical and demographic disparities significantly also shape Kenya's labor market outcomes. Kenya's unemployment rate of 5.6 percent in 2021 appears moderate when compared to regional peers like Rwanda and South Africa, as well as aspirational comparators like Bangladesh and Malaysia (Figure 5). However, this aggregate figure masks substantial disparities across different population segments. Labor force participation data reveals stark gender differences, with males showing a participation rate of 73 percent compared to 63 percent for females. The disparity is even more pronounced in NEDI (North and Northeastern Development Initiative) regions, where overall labor force participation is 4 December 2024 | Edition No. 30 The State of Kenya’s Economy Box 2: Kenya's latest poverty data: Persistent disparities in welfare and employment (contd) just 56 percent compared to 71 percent in non-NEDI regions. Rural areas, while experiencing a lower unemployment rate, face significantly higher rates of underemployment at 14 percent, compared to 8 percent in urban areas (Figure 6). Women in NEDI regions face higher underemployment rates (11 percent) compared to men (7 percent). Perhaps the most striking disparity affecting NEDI regions is the NEET (Not in Education, Employment, or Training) level for women. While females consistently have higher NEET levels across all age groups compared to males, the difference is especially stark in the 25-34 age range, where 31 percent of women are NEET compared to just 10 percent of men, indicating severe barriers for women in these areas and perhaps stricter social norms affecting girl’s empowerment and women in the labor market. Figure 5: Unemployment rates compared against peer Figure 6: Unemployment and underemployment rates, 2021 countries, 2021 40 Unemployed Underemployed 34 20 35 18 30 16 25 8 Percent 20 14 11 16 13 15 12 12 Percent 10 14 9 10 7 6 5 5 5 6 7 5 4 3 3 3 4 8 1 0 6 11 South Africa 2021 Bangladesh 2022 Rwanda 2021 Uganda 2021 Ghana 2022 Malaysia 2021 Indonesia 2021 Tanzania 2020 Sri Lanka 2021 Ethiopia 2021 Thailand UMIC LMIC Kenya 2021 4 8 6 6 5 6 2 3 0 Rural Urban Non-NEDI NEDI Male Female National Kenya Regional Structural Aspirational Groups Location Region NEDI National Source: WDI Source: 2021 Kenya Continuous Household Survey 1.4 External sector Figure 7: The current account deficit narrowed, supported by higher agricultural exports and resilient remittances Kenya’s current account has shown improvement, driven Trade balance Remittances Primary income balance primarily by a recovery in goods exports and continuous Non-remittance secondary income balance Current account balance 10 growth in remittances. The current account deficit has been narrowing since the second half of 2023 and 5 narrowed further in 2024, averaging US$4.2 billion in 2024 0 compared to US$5.1 billion in 2023. This was as a result of Percent a narrowing trade balance and increasing remittances. The -5 narrower trade balance was supported by a 2.8 percent -10 average increase in goods exports in the year to August 2024 and a 5 percent decline in imports. However, while tea -15 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 and horticulture exports grew by 3.5 percent and 7 percent 2022 2023 2024 on average respectively, manufactured goods exports Source: CBK declined by 4 percent cumulatively over the same period. Private capital inflows remained weak amid increasing Services exports have also been contracting sharply. Goods debt repayments. In 2024, private capital inflows were imports declined by 5.1 percent cumulatively in the year subdued, exacerbated by higher debt servicing, including to August 2024, despite an improvement in the import the repayment of the residual US$500 million Eurobond of machinery and transport equipment (4.7 percent). in June 2024 (after US$1.5 billion was settled in February). Imports of oil products declined by 10.2 percent during Foreign direct investment (FDI) has also declined, reflecting the same period despite a decline in oil prices. Improving a broader trend of reduced investor confidence and FDI global economic conditions, including lower inflation performance below the regional average. Portfolio and across advanced and emerging economies and strong other financial inflows, which had been slowing since labor markets drove remittances up by 10.7 percent (to 3.7 2022, showed some recovery in Q2:2024 (Figure 8), as percent of GDP) over the year to August 2024. Kenya regained access to international financial markets following a period of limited external financing in 2023. December 2024 | Edition No. 30 5 The State of Kenya’s Economy Figure 8: Financial inflows remained constrained Figure 9: Growth in tourism arrivals (3-month moving average) Capital account balance Direct investment, net Portfolio investment, net 160 Other investment, net Net errors and omissions Reserves and related items Current account balance 140 12 120 10 8 100 Percent 6 80 4 Percent 2 60 0 40 -2 -4 20 -6 0 -8 May -22 Sep -22 May -23 Sep -23 May -24 Sep -24 Jan -22 Jan -23 Jan -24 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2022 2023 2024 Source: CBK and KNBS Source: CBK *Reserves: - gain / + loss Growth in tourist arrivals is decelerating as tourism were bolstered by the Eurobond and the infrastructure receipts decline. The growth in tourists’ arrivals has been bond issuances at the beginning of the year. The reserves declining since its peak after the COVID-19 pandemic, meet the Central Bank of Kenya's statutory requirement of (Figure 9) accompanied by a decline in tourism receipts maintaining at least four months of import cover. by 24.9 percent in the first half of 2024 compared with the same period in 2023. The decline in tourists' receipts The shilling has remained stable since the sharp can also be attributed to a slower growth in tourists from appreciation of February 2024. It appreciated by about countries with higher purchasing power. 19.0 percent against the US dollar between February and September 2024, supported by the Eurobond buyback in An improving trade balance, diaspora remittances, and February and has maintained stability since then (Figure external financing have bolstered reserve buffers. As of 11). This appreciation had marked a reversal of a steep November 2024, official reserves stood at US$9,007 million, depreciation in 2023. The stability in 2024 has been further equivalent to 4.6 months of import cover (Figure 10). These supported by a strong reserve position relative to 2023. Figure 10: Official reserves remain sufficient and now above the Figure 11: The shilling has stabilized against the US dollar since statutory minimum February 2024 O cial reserves Import cover Ksh/US$ Minimum import cover requirement (Months) 170 10,000 6.0 160 5.5 O cial reserves in million US $ 9,000 5.0 150 Import cover in months 8,000 4.5 140 Ksh/US$ 7,000 4.0 6,000 130 3.5 5,000 3.0 120 4,000 2.5 110 2.0 3,000 100 1.5 2,000 1.0 90 1,000 0.5 19/11/2024 03/02/2022 08/04/2022 21/06/2022 26/08/2022 03/11/2022 12/01/2023 17/03/2023 26/05/2023 02/08/2023 05/10/2023 14/12/2023 21/02/2024 30/04/2024 08/07/2024 10/09/2024 - 0.0 May-22 May-23 May-24 Nov-22 Nov-23 Nov-24 Mar-22 Mar-23 Mar-24 Sep-22 Sep-23 Sep-24 Jan-22 Jan-23 Jan-24 Jul-22 Jul-23 Jul-24 Source: CBK Source: CBK 6 December 2024 | Edition No. 30 The State of Kenya’s Economy Box 3: Opportunities for effective infrastructure public-private partnerships Infrastructure is a key platform for job creation, public service delivery, and economic growth. The Kenya Vision 2030 highlights the country’s aspiration to be firmly interconnected through a network of roads, railways, ports, airports, water and sanitation facilities, and telecommunications. Thus, infrastructure is central to Kenya’s quest to become an industrialized, food-secure, conflict-free, and green high-income country. Kenya needs reliable infrastructure to connect supply chains and efficiently move people, goods and services within the country and across borders. Closing infrastructure gaps remains a priority in Kenya and the Government is increasingly looking to draw on the private sector innovation, efficiency, and financing solutions to help deliver major infrastructure projects through public-private partnerships (PPPs). Kenya has a progressive PPP framework (policy, legislation, and institutions), implementation of which can be further strengthened, and an initial portfolio of promising PPP projects. Supported under the World Bank-financed Infrastructure Finance and Public-Private Partnerships (IFPPP) Project, the Government has mobilized about US$1 billion private capital, and currently has 29 projects in the PPP pipeline estimated at $11 billion at various stages of development. Building on the PPP framework that has been put in place, there is an opportunity for enforcing it and bringing competent private sector partners for successful implementation of infrastructure PPP projects. Going forward, the country’s success in PPP projects will depend on (i) putting in place good governance, oversight, planning, and accountability mechanism with assigned key performance indicators (KPIs), including strengthening of practices around unsolicited project proposals, to foster predictability and confidence in PPP project development; (ii) choosing the right projects that are economically, technically, financially, environmentally, and socially viable and are aligned to sectoral priorities based on a robust planning process; (iii) adopting fair, transparent and competitive bidding process as a preferred method for selecting capable private partners for PPP transactions for better competitive price discovery and value for money; and (iv) using just the right amount of public sector funding to unlock private sector capital into public infrastructure while minimizing the possible adverse impacts on public finance. 1.5 Monetary and financial sector effects of tightening monetary policy which also stabilized performance the shilling, reducing the inflationary pressures from the The tighter monetary policy framework continued exchange rate. to reduce inflationary pressures and contain capital outflows. Headline inflation fell to 2.8 percent by The CBK has been gradually easing monetary policy in November 2024 (y/y), down from 6.8 percent in November response to lower inflationary pressures and loosening 2023, remaining below the mid-point of the Central Bank global financial conditions. Following successive of Kenya (CBK) target range of 5±2.5 (Figure 12). Food rate hikes in response to domestic and international inflation decreased from 7.6 percent y/y in November 2023 inflationary pressures, the CBK reduced the Central Bank to 4.5 percent in November 2024, driven by a decline in Rate (CBR) in the last three Monetary Policy Meetings prices of potatoes, onions and cabbages. Energy deflated (MPC) from 13.0 percent in August 2024 to 11.25 percent by 0.5 percent from an inflation of 11.1 percent in the in December 2024. This easing marks a shift from the same period due to downward adjustments in pump previous tightening cycle, which effectively stabilized prices and lower electricity costs. Core inflation remained inflation below the midpoint of the target range, partially unchanged at 3.6 percent but its annual average reduced influenced by a more stable exchange rate. This shift also to 3.7 percent in the year to November 2024, down from aligns with ongoing global monetary policy rate cuts, both 4.3 percent in the year to November 2023, reflecting the in advanced and emerging economies. Figure 12: Inflation eased and remained below the target midpoint Core In ation Food In ation Housing, water, electricity, gas & other fuels + transport in ation Percentage point contributions to 10 annual percentage change 9 8 Upper bound 7 6 Midpoint 5 4 Lower bound 3 2 1 0 -1 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Source: CBK December 2024 | Edition No. 30 7 The State of Kenya’s Economy Private sector credit growth has been on a downward adequate liquidity and capital requirement ratios. As of trend, in the context of high interest rates, domestic June 2024, the sector was well capitalized with a capital financing of persistent fiscal deficits, and a stronger adequacy ratio of 19.1 percent, which was above the shilling. Private sector credit grew by 1.3 percent in August minimum capital requirement of 14.5 percent. The liquidity 2024, down from 12.6 percent a year earlier (Figure 13). This ratio was 53.5 percent, exceeding the statutory threshold slowdown was primarily driven by slower growth in credit of 20.0 percent. The sector also remained profitable with to building and construction sector which declined from H1 2024 pre-tax profit growing by 16.1 compared with the a growth of 3.0 percent in January 2024 to a contraction same period in 2023. by 13.0 percent in August 2024 and manufacturing sector which decreased from a growth of 23.1 percent in 1.6 Fiscal developments January 2024 to a contraction by 6.7 percent in August Fiscal consolidation efforts during the fiscal 2024. However, credit to some sectors grew including year (FY) 2023/24 were undermined by revenue mining and quarrying (102.3 percent), agriculture (7.2 underperformance, and the government significantly percent), and private households (5.9 percent). The added to a large stock of pending bills. The fiscal overall slowdown in private sector credit growth reflects deficit reduced from 5.6 percent of GDP in FY2022/23 to the effects of a tight monetary policy stance, which 5.2 percent in FY2023/24. However, the planned fiscal has contributed to higher borrowing costs and reduce adjustment did not materialize as the overall deficit was credit demand. Additionally, the decline is also partly higher than the target of 4.7 percent of GDP (initial budget attributable to the government crowding out the private estimate), mainly due to revenue shortfalls and increased sector following increased domestic borrowing. With financing needs, including elevated debt service costs. monetary policy easing, credit demand is expected to Debt vulnerabilities including elevated debt servicing recover as interest rates become more accommodative costs, accumulated pending bills, and missing revenue to support a broader economic rebound. targets remain key challenges. Non-performing loans (NPLs) have been increasing, Despite rising in FY2023/24, revenues continue to highlighting growing credit risks in the banking sector. fall behind targets. Total revenue (including grants) as The overall NPLs ratio rose from 13.0 percent in August a share of GDP increased to 16.9 percent in FY2023/24, 2023 to 14.3 percent in August 2024, the highest in over higher than 16.7 percent in the previous FY, driven by 17 years (Figure 14). Comparatively, large and medium- higher value added tax collection and ministerial and sized banks had the lowest NPLs ratio while smaller banks departmental fees. Still, revenue collection fell short of had ratios exceeding the sector average primarily due the fiscal year target by around 1.9 percent of GDP as all to their limited risk diversification and higher exposure revenue sources underperformed. The Government of to risk in their loan portfolios.4 This indicates that credit Kenya (GoK) introduced tax administration and policy risks remained elevated provisions for increased NPLs. measures in the Finance Bill for FY2023/24 and in the However, despite the increasing NPLs, the banking sector 2023 Tax Laws (Amendment) Bill, which was submitted remains strong with adequate provisions for the NPLs and to Parliament in mid- December 2023.5 However, these Figure 13: Credit to private sector declined amid high interest Figure 14: Banks asset quality declined as NPLs continued to rates and exchange rate effects on foreign currency loans increase Nominal lending rate Nominal policy rate NPLs/Total Loans NPLs/Total Loans (large banks) Nominal growth in private Growth in private sector credit adjusted NPLs/Total Loans (medium banks) NPLs/Total Loans (small banks) sector credit for exchange rate valuation 20 18 19 16 18 14 17 12 16 Percent Percent 10 15 8 14 6 13 4 12 2 11 10 0 Nov-22 Nov-23 Jun-24 Jan-22 Jan-23 Jan-24 Mar-22 Sep-22 Mar-23 Sep-23 Mar-24 Aug-24 May-22 May-23 Jul-22 Jul-23 May-24 Dec-22 Dec-23 Aug-23 Aug-24 Mar-22 Mar-23 Mar-24 Jun-22 Jun-23 Jun-24 Sep-23 Sep-24 Sep-22 Feb-24 Jan-24 Apr-24 Jul-24 Source: CBK Source: CBK 4 The Kenyan banking sector has 38 commercial banks, categorized into three tiers: 9 in Tier 1 (large banks), 8 in Tier 2 (medium banks), and 21 in Tier 3 (small banks). 5 The Finance Act 2023, passed in June 2023 by the National Assembly despite public opposition has been challenged in court, first in 2023 and again in 2024 on its constitutionality. In both instances, the Supreme Court ruled in favor of the Government enabling its implementation. 8 December 2024 | Edition No. 30 The State of Kenya’s Economy measures yielded less than the initially projected revenue expenditure allocations (Figure 15). As a result, due to failure to enact the amendments and possible gaps expenditures are projected to decline further to 21.5 in tax administration.6 percent of GDP in FY2024/25. Figure 15: First supplementary of FY2024/25 – Development Revenue underperformance in FY2023/24 added expenditure bore the burden of spending cut spending pressures to FY2024/25. Total expenditure Recurrent Transfer to counties Development Total expenditure as a share of GDP reached 22.4 percent in FY2023/24 25 22.6 22.4 22.1 21.5 which was 1.6 percentage points lower than the final 20 3.5 3.4 3.9 3.3 supplementary budget of the year. This was attributed to 2.9 2.4 2.5 2.5 Percent of GDP revenue shortfalls that characterized the year resulting 15 in carryovers to the FY2024/25 budget, including 10 transfers to county governments that were disbursed 16.2 16.6 15.7 15.7 in the first quarter of FY2024/25.7 As reflected in Box 1, 5 the downward revision of revenue projections (by 1.6 0 percentage points) in the FY2024/25 Supplementary I Actual Preliminary Approved First budget supplementary budget were partly compensated by lower expenditures FY2022/23 FY2023/24 FY2024/25 FY2024/25 (0.6 percentage points), mainly from development Source: The National Treasury Box 4: Budget credibility and fiscal slippages Achieving the planned fiscal deficit and reducing the debt burden remains a challenge in many countries as deviations between budget projections and actual outcomes persist. Factors taken into consideration when preparing the budget include the general economic outlook guided by past performance and the prevailing global, regional and domestic conditions. These conditions are important as they inform the revenue prospects. Arguably, reliable revenue and expenditures forecasts contribute to the credibility of the budget, credibility defined here as the degree of deviations between the planned fiscal activities and the outcomes (Jena and Sikdar, 2019). Kenya’s budget process has been characterized by missed revenue targets necessitating expenditure adjustments during budget implementation. The key issue stems from overly optimistic revenue projections leading to revenue shortfalls and thereby missed revenue targets. While supplementary budgets remedy unmet revenue projections, discretion comes to play in determining expenditure Figure 16: Deviations in fiscal deficit targets put pressure on the cuts resulting in shifts in spending priorities and unmet debt burden service delivery promises. At the county level, revenue Budgeted Actual over projections impact county transfers, constituting 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 and additional spending pressure. 0 -1 While the fiscal deficit has improved, narrowing -2 from 7.9 percent of GDP in FY2019/20 to 5.2 percent -3 in FY2023/24 (see section 1.6), it falls short of the Percent of GDP -4 government targets. The deficit has overshot in four of the past six years highlighting the ongoing challenge in -5 adhering to fiscal consolidation targets. Persistent fiscal -6 slippages not only threaten budget credibility but also -7 diminish investor confidence, likely to increase Kenya’s -8 vulnerability to external economic shifts, which can further -9 affect debt sustainability and budget predictability. Source: The National Treasury Enhancing budget credibility removes uncertainty in budget execution and improves the efficiency of government expenditures (Simson and Welham, 2014).8 Discussions are ongoing for ensuring realistic revenue projections grounded in realistic economic data and informed by past trends to set more achievable targets. The country should also focus on strengthening tax administration to minimize leakages and improve compliance and support domestic resource mobilization. On the expenditure side, the ongoing fiscal consolidation should be more effective in focusing on reducing non-essential spending to further relieve budgetary pressure. This will reduce the fiscal deficit and reduce reliance on debt financing. These measures can create a more credible budget, reduce fiscal pressures, and lay a stronger foundation for sustainable economic growth. 6 IMF/WB Debt Sustainability Analysis (DSA), November 2024. 7 Equitable share in FY2023/24 was provided for in the Division of Revenue Act 2023; due to revenue shortfall, the outstanding balance of KSh 30.83 billion was disbursed to county governments in the first quarter of FY2024/25 (https://deputypresident.go.ke/plans-underway-disburse-money-counties) 8 Simson, R., & Welham, B. (2014). Incredible Budgets: Budget Credibility in Theory and Practice (Working Paper No. 400). Overseas Development Institute. December 2024 | Edition No. 30 9 The State of Kenya’s Economy Accumulated pending bills remain elevated but Figure 17: Increased domestic borrowing pushed Kenya’s yield curve upward declining. Pending bills declined to KSh 528.4 billion (2.9 30-June-22 30-June-23 30-June-24 percent of GDP) in September 2024 from KSh 516.3 billion 19 (3.2 percent of GDP) in FY2023/24 and KSh 567.5 billion (4.0 18 17 percent of GDP) in FY2022/23. With pending bills mounting 16 to about 3.2 percent of GDP by June 2024, if considered in 15 14 the fiscal framework, the fiscal deficit would have reached Yield (%) 13 12 8.4 percent of GDP in FY2023/24. 11 10 Interest payments continue to rise and adding spending 9 8 pressures. Spending pressures from interest payments 7 6 mounted during FY2023/24, reaching 5.3 percent of GDP 3M 6M 1 2 3 4 5 6 7 8 9 10 11 12 13 14 51 16 17 18 19 20 21 22 23 and accounting for almost 1/3 percent of total revenues Years to maturity and grants. Rising interest payments (estimated at 5.6 Source: CBK percent of GDP in FY2024/25) leaves limited fiscal space for reduced the shilling-value of external debt. However, the spending on social and productive sectors. Nevertheless, risk of debt distress remains high. Under the World Bank- government has contained expenditures including on IMF Debt Sustainability Analysis, external debt indicators wages and benefits, and development expenditure, which in terms of revenue and exports breach their respective experienced a contraction as a share of GDP in FY2023/24. thresholds under the baseline scenario (present value of external debt to exports, debt service to exports, and Kenyan sovereign credit ratings were downgraded after debt service to revenue), while the present value of total the rejection of the 2024 Finance Bill. The budget gap public debt-to-GDP ratio remains above the 55 percent emerging from the rejected 2024 Finance Bill put Kenya on benchmark through 2029 (Figure 18). a more challenging fiscal path—resulting in downgrades of Kenya’s sovereign credit rating by Moody’s, S&P, and Domestic debt is now Kenya’s largest liability. Following Fitch in July/August 2024. Increased interest payments and increased domestic borrowing and the appreciation of debt servicing have led to a surge in domestic borrowing, the shilling in FY2023/24, the composition of total public pushing Kenya’s yield curve upward, which further crowds debt changed toward domestic debt, accounting for 51.1 out the private sector. To minimize its financing costs, percent of total debt, while the share of external debt Kenya prioritizes concessional borrowing over high-yield declined to 48.9 percent in FY2023/24 from 53.0 percent in commercial debt. For domestic financing, the government FY2022/23. Domestic debt vulnerabilities arise from high has prioritized issuing medium-to-long-term debt yields and declining maturity periods. The average years securities to lengthen the maturity of domestic debt and to maturity of domestic debt declined to 7.3 in FY2023/24 reduce refinancing risk. from 8.5 in FY2022/23; treasury bonds account for a larger share of domestic debt (86.9 percent in FY2023/24). The appreciation of the shilling reduced the public Regarding external debt, the largest share of external debt-to-GDP ratio in FY2023/24; however, the overall debt remains from multilateral creditors (53.9 percent and external debt remain at high risk of debt distress. in FY2023/24), consistent with prioritizing concessional Total public debt decreased to 65.7 percent in FY2023/24 borrowing, while the share of commercial creditors has from 72.0 percent in the previous year, as the appreciation been declining. 10 December 2024 | Edition No. 30 The State of Kenya’s Economy Figure 18: The risk of external debt distress is assessed high following sustained breaches of sustainability thresholds by solvency and liquidity indicators under the baseline scenario a. PV of debt-to GDP ratio b. PV of debt-to exports ratio Baseline Historical scenario Baseline Historical scenario Most extreme shock Threshold Most extreme shock Threshold 50 450 45 400 40 350 35 300 30 250 25 20 200 15 150 10 Most extreme shock: One-time depreciation 100 Most extreme shock: Exports 5 50 0 0 2024 2026 2028 2030 2032 2034 2024 2026 2028 2030 2032 2034 c. Debt service-to-exports ratio d. Debt service-to-revenue ratio Baseline Historical scenario Baseline Historical scenario Most extreme shock Threshold Most extreme shock Threshold 50 30 45 25 40 35 20 30 25 15 20 10 15 10 Most extreme shock: Export Most extreme shock: One-time depreciation 5 5 0 0 2024 2026 2028 2030 2032 2034 2024 2026 2028 2030 2032 2034 Source: World Bank – IMF Debt Sustainability Analysis, November 2024. 2. Outlook and Risks 2.1 Outlook and resilient private consumption. To sustain inclusive Kenya’s real GDP is projected only to gradually pickup growth with more and better jobs, Kenya should address in the medium term; structural imbalances still hinder structural challenges, including ones related to fiscal Kenya’s goal of sustained and inclusive growth that sustainability, governance, weakening exports, lagging create more and better jobs for its population. Growth in productivity growth, and vulnerability to climate shocks. 2024 is estimated at 4.7 percent, a downward revision from the June 2024 economic update following headwinds Private consumption is expected to continue driving that have already impacted headline growth during the economic growth. Lower inflation, adequate weather year including severe floods in Q2-24, subdued business conditions, and easing monetary conditions will support sentiment following the mid-2024 protests, a tighter disposable incomes of households and firms. Moreover, monetary policy, and ongoing fiscal consolidation. remittance inflows to Kenya are projected to remain However, while this is lower compared to the growth in resilient and provide further support. Improved business 2023, and lower than previously projected, it is still in line confidence, adherence to projected fiscal consolidation by with Kenya’s potential growth (4.7 percent) and EAC peers’ the government, and a stable exchange rate will support average (4.7 percent), and above the Sub-Saharan African a recovery in private investment. However, growth of average (3.0 percent). Looking ahead, Kenya is projected public consumption and public investment is projected to to grow by 5.1 percent on average in 2025-2026, assuming remain subdued due to the planned fiscal adjustment in only a gradual pick up of private investment, export growth, the medium term. December 2024 | Edition No. 30 11 The State of Kenya’s Economy On the supply side, resilience of agriculture and services Keeping inflation within the CBK’s target range is will continue to drive growth. The agriculture sector in expected to support credit growth. Sustained low Kenya remains a key driver of growth, jobs, and poverty inflationary pressures, consistent with easing global reduction. Agriculture is projected to grow at 5.0 percent inflation and lower domestic food prices, are expected on average in the medium term, supported by adequate to lead to a more accommodative monetary policy, weather and availability of inputs following easing of eventually supporting private-sector credit growth. Also, global inflation. Linkages with other subsectors will boost resilience in remittance inflows and government efforts to the food processing industries, merchandise exports, raise revenue and sustain a low fiscal deficit in the medium as well as households’ incomes. The industrial sector is term are expected to keep the shilling stable. projected to pick up slightly in 2025 due to reduced cost of production and stable exchange rate. Performance Kenya’s external position is projected to remain stable in in the services sector is projected to remain stable, with the medium term. The current account deficit is projected a projected growth of 5.6 percent on average over the in the range of 4.0 to 4.1 percent of GDP. Export growth is medium term. Furthermore, wholesale and retail trade are expected to improve in the medium term in the context of expected to continue recording strong growth as credit strong GDP growth in Kenya’s trading partners, continued growth to this sector improves. Projected lower fuel prices implementation of trade agreements (EAC, EU-EPA and will support growth in transport; while planned reforms in AfCFTA) and the ongoing structural reform agenda. Further, the ICT sector will support improvements in productivity receipts from travel/tourism and remittances are projected over the medium term. to remain steady as global economic activity firms up. The baseline assumes a recovery in imports underpinned by The government projects sustained fiscal a stable exchange rate and increased domestic demand. consolidation in the medium term. The risk of fiscal The projected current account deficit is expected to be slippages identified in the previous Kenya Economic financed by a steady capital inflow from both government Update materialized in 2024, as revenue shortfalls borrowing (mostly on concessional terms) and private resulted in additional spending cuts, and rising financing inflows, as FDI and other private capital inflows recover in needs resulted in increased domestic borrowing. the context of improved business sentiments and easing Following the withdrawal of the Finance Bill 2024, the global financial conditions. government adjusted its fiscal consolidation path to accommodate increased financing needs and lower While projected GDP growth will increase per capita revenue projections in the medium term. Yet the fiscal incomes, its effect on medium-term poverty reduction deficit is projected to narrow to 4.3 percent of GDP in remains unclear in light of past trends. While Kenya’s per FY2024/25 and 3.8 percent of GDP in FY2025/26, with a capita GDP level increased by 40 percent between 2005 primary surplus of 1.6 percent. Total revenue including and 2021, the US$2.15 poverty rate remained unchanged grants is projected to rise during FY2024/25 – FY2025/26, at 36 percent. The COVID-19 pandemic and a succession of largely underpinned by non-tax measures, continued weather-related shocks have partly contributed to this, and leveraging on technology to improve tax collection, Kenya’s economic growth has been insufficiently inclusive. sealing revenue loopholes, and increased ministerial The government’s focus on improving productivity of and departmental fees through services they offer to key value chains could be an important driver of growth the public. On the expenditure side, the government is and poverty reduction. However, for a more inclusive expected to continue containing non-priority spending growth agenda, there is a need to focus on new sources while safeguarding social spending. Planned policies to of growth as well as new approaches. One such approach support expenditure rationalization include continuing is broadening the participation of women and redefining containing the wage bill and increasing spending the gendered roles in economic growth to ensure that efficiency. In addition, transparency of spending will be men and women contribute equally to economic growth supported by ongoing transitioning from cash to accrual and development. Promoting such gender equality in basis of accounting (launched in October 2024/25) to economic participation enhances aggregate productivity, improve resources management (all assets and liabilities) reduces poverty, and fosters sustainable economic and enhance financial and fiscal reporting, which are growth. Part 2 of this KEU focuses on women’s economic important for data-informed decision making. empowerment as an avenue to unlocking Kenya’s inclusive growth and poverty reduction. 12 December 2024 | Edition No. 30 The State of Kenya’s Economy The baseline assumes the government’s planned climate consolidation. However, for fiscal consolidation to be actions to support growth and fiscal consolidation. effective, it must be socially acceptable and equitable. Although the baseline assumes adequate weather This requires that consolidation efforts prioritize efficiency conditions, Kenya remains vulnerable to climate change in the budget and increasing the overall progressivity of shocks including floods, drought, and warmer-than- public finances. average temperatures. The planned government interventions towards climate change adaptation and Failure to meet fiscal targets would exacerbate Kenya’s mitigation measures in the forecast horizon include debt vulnerabilities and threaten macroeconomic rehabilitation of wetlands (with the ongoing preparation stability. Delays in implementing structural and fiscal of land reclamation bill/policy targeted to be completed reforms may further impede private investment and in FY2024/25) and reforestation (Kenya launched a tree employment growth, challenging Kenya’s economic planting initiative in 2022 with an aim to plant 15 billion recovery. Continued high levels of domestic borrowing trees nationwide by 2032). These actions are expected to would further crowd out the private sector. Moreover, rising generate economic co-benefits including, among others, debt service repayments would reduce the government’s sustainable land use for increased agricultural yields, ability to implement countercyclical policies during improved bio-diversity conservation and time savings from economic downturns. Maintaining fiscal discipline remains enhanced urban mobility and access to resources such key to reducing debt accumulation and macroeconomic as treated piped water. These savings can be redirected vulnerabilities. to other economic activities, further boosting economic growth. These actions come at a cost, but the long-term Furthermore, Kenya’s increasing vulnerability to benefits outweigh the costs.9 extreme weather conditions, including droughts and floods, poses a serious threat to agricultural output and 2.2 Downside risks infrastructure. After experiencing two consecutive years of Kenya’s economic outlook faces significant downside drought in 2021 and 2022, the long rains between March risks. Fiscal slippages could further undermine debt and June 2024 caused severe flooding, leading to loss of sustainability and private sector-led growth. To achieve life, damage to infrastructure, the death of livestock, and fiscal targets and ensure long-term fiscal sustainability, displacement of people. An estimated 315 people were the country must place greater emphasis on fiscal killed while more than 293,200 people (58,641 families) Table 1: Key economic indicators and forecast, 2021 to 2026 (percent, unless otherwise stated) 2021 2022 2023 2024 e 2025 f 2026 f Real GDP growth, at constant market prices 7.6 4.9 5.6 4.7 5.0 5.1 Private consumption 6.4 3.3 6.2 5.6 5.4 5.4 Government consumption 6.0 8.1 3.5 2.0 1.5 1.9 Gross fixed capital investment 10.8 -0.8 1.9 2.1 5.5 7.1 Exports, goods, and services 15.3 11.9 -4.5 5.5 9.8 10.1 Imports, goods, and services 22.2 4.6 -3.1 2.5 5.6 7.2 Real GDP growth, at constant factor prices 7.1 4.5 5.4 4.7 5.0 5.1 Agriculture -0.4 -1.5 6.5 4.8 5.0 5.1 Industry 7.5 3.9 1.9 0.9 2.9 3.6 Services 9.6 6.6 6.2 5.8 5.6 5.6 Inflation (consumer price index) 6.1 7.6 7.7 5.0 5.0 5.0 Current account balance (% of GDP) -5.2 -5.0 -4.0 -4.0 -4.1 -4.1 Net foreign direct investment inflow (% of GDP) 0.0 0.3 0.2 0.8 1.0 1.3 Fiscal balance (% of GDP)* -7.5 -6.2 -5.6 -5.2 -4.3 -3.8 Revenues (% of GDP) 17.3 17.6 16.7 16.9 17.2 17.9 Debt (% of GDP) 68.4 68.0 72.0 65.7 62.8 60.5 Primary balance (% of GDP) -3.4 -1.6 -0.8 0.1 1.3 1.6 Source: World Bank staff calculations based on KNBS, The National Treasury, and the Central Bank of Kenya. Note*: Fiscal year runs from July 1 to June 30; 2021 = FY2020/21 9 See https://openknowledge.worldbank.org/entities/publication/b59c453d-c2cb-421d-909d-7c05cb0d4580 for cost estimates for select climate investments. December 2024 | Edition No. 30 13 The State of Kenya’s Economy were displaced, while affecting the livelihoods of many exacerbate these challenges. Kenya relies heavily on oil other Kenyans. As extreme weather events become more and fertilizer imports, hence fluctuations in oil prices due to frequent, the agricultural sector might be severely hit, such instability could increase fuel and fertilizer costs and worsening food security, and increasing the risk of water- overall inflation. If conflicts disrupt trade routes, it could borne diseases. Climate change mitigation and adaptation lead to further supply chain challenges, compounding the remain top policy priorities. economic pressures faced by the country. Externally, slower growth in Kenya’s key trading Upside risks include faster than expected reform partners could potentially weaken demand for Kenyan implementation and a better external environment. exports. This would reduce foreign exchange earnings Fast-tracked structural reforms under the government’s and impact sectors like agriculture and manufacturing. Medium-Term Plan (MTP) IV, faster-than-expected Additionally, a decline in remittance inflows—an essential normalization of global financing conditions, and income source for many households—could dampen continued lower international fuel and food prices would domestic consumption, limiting overall economic growth. have a positive impact on Kenya’s economic outlook. Furthermore, international geopolitical instability may Table 2: Key policy priorities to address Kenya’s underlying structural challenges Policy priority Recommendation Bring down the debt burden to 55 percent of GDP by 2029 from the current level (measured Reduce debt vulnerabilities in present value terms), consistent with Kenya’s debt anchor, through continued domestic revenue mobilization, expenditure rationalization, and growth enhancing measures. Improve efficiency, transparency, and Improve the cash, public procurement, wage bill, and public investment management accountability of public spending systems to reduce inefficiencies and wastages at various levels of government. Implement the Medium-Term Revenue Strategy (MTRS) to expand the revenue base, Boost domestic revenues and improve improve tax compliance, and reassess current tax instruments. This should be coupled the progressivity of tax policy with improvement in the progressivity and fairness of the tax policy. 14 December 2024 | Edition No. 30 Special Focus SPECIAL FOCUS Photo: ©Georgina Goodwin/World Bank December 2024 | Edition No. 30 15 Special Focus 3. Women's Economic Empowerment: Key to Unlocking Kenya's Inclusive Growth Kenya has made notable progress in improving the agency. True empowerment extends beyond employment legal and regulatory framework for gender equality. and earnings to encompass autonomy, education, health, The country has advanced in creating legal support for and protection from violence—factors that are deeply women’s economic participation, particularly in areas such interconnected with economic participation and success. as marriage and mobility. The Government commitment Examining these multifaceted dimensions, this special focus has also translated into gender parity in primary and presents a comprehensive view of women’s challenges secondary education. and opportunities, emphasizing both the structural and cultural barriers that hinder their full economic integration, Despite progress, however, women continue to and proposes targeted interventions spanning girls' and experience disproportionately poor economic women’s life cycles.12 outcomes. The transition from education to the labor market presents numerous obstacles for women. While This special focus is timely, given Kenya's challenging Kenya's female labor force participation, similar to its macro-fiscal environment, which calls for renewed Sub-Saharan peers, is relatively high compared to global attention to new sources of economic growth. averages,10 it consistently trails that of men across all age Enhancing women's economic empowerment is one and education levels. In addition, women face systemic such opportunity. disadvantages in the quality of jobs, being overrepresented in unpaid labor and lower-paying, less secure occupations.11 3.1 Economic empowerment of women is Their earnings lag significantly behind that of men across a key opportunity for Kenya’s inclusive all sectors, with an overall gender pay gap of 38 percent, growth highlighting economic disparities that persist despite Enhanced women’s economic empowerment (WEE) educational advancements. Moreover, societal norms that is a key opportunity to boost Kenya’s productivity and encourage early marriage and parenting for girls amplify drive more inclusive economic growth. Global evidence these inequalities, limiting their access to education and supports that enhanced economic empowerment for steering them into less lucrative economic opportunities, women leads to economic growth and productivity. A stressing the need for multifaceted strategies to address recent study by the International Monetary Fund (IMF) these ingrained barriers. estimates that closing gender gaps in education and labor market access, alongside reducing burdensome This special focus is based on a comprehensive analysis daily tasks like water fetching, could boost Kenya's of Kenya’s progress and challenges in enhancing GDP by up to 10 percent.13 Equalizing educational women’s economic empowerment (WEE). It addresses opportunities between girls and boys could raise GDP three overarching questions: (i) What progress has Kenya by 4.4 percent, decrease the poverty headcount by made in closing gender gaps in economic outcomes? 2.3 percentage points, reduce inequality and increase (ii) What factors contribute to the persistence of these government revenues by approximately 0.6 percent gaps? (iii) What policies and strategies can effectively of GDP. Providing safe piped water to all households enhance women’s economic empowerment? Central could boost GDP by an additional 2.7 percent. Globally, to this analysis is the recognition that WEE is more than countries with better women’s economic rights also increasing women’s participation in the workforce; have higher economic growth.14 At the firm level, more it is a transformative process that allows women to inclusion of women in management positions also actively participate in, control, and benefit from income- generates productivity gains and moves women out of generating activities, while also building their voice and lower-productivity occupations.15 10 ILO (2024). Employment and social trends by region. World Employment and Social Outlook, 2024(1), 37-60. 11 UN Women (2023). “Why Women Earn Less: Gender Pay Gap and Labour-Market Inequalities in Kenya.” 12 Multiple data sources are used, primarily the 2022 Kenya Demographic and Health Survey (KDHS). 13 IMF, 2021. Kenya selected issues paper; IMF country report No. 21/276. Washington, D. C. 14 Naveed, A. et al., (2023). Economic development through women’s economic rights: a panel data analysis. International Economics and Economic Policy, 20(2), 257-278. 15 Moody’s Analytics (2023). Close the Gender Gap to Unlock Productivity Gains. 16 December 2024 | Edition No. 30 Special Focus Investing in adolescent girls as part of broader WEE and exert greater bargaining power regarding financial strategies offers transformative potential. Adolescence decisions,19 which can lead to significant improvements is a pivotal period where crucial life decisions are made, in the education and health outcomes of their families, impacting long-term personal and economic outcomes. sparking a generational advancement in socio-economic Focused investments during this stage can profoundly conditions.20 Economically empowered women can shift alter life trajectories, offering substantial social and gender norms, reduce biases, and prevent and respond economic returns.16 A recent study by UNICEF shows to critical issues such as gender-based violence, all the efficacy and cost-effectiveness of an intervention contributing to individual and societal resilience and package aimed at adolescent girls, comprising adolescent- sustainable development goals.21 Further, applying responsive health services, cash transfers, and parenting a spatial lens is particularly relevant due to regional programs.17 These interventions promise to enhance the variations in the extent and drivers of women’s economic health, well-being, and future productivity of adolescent empowerment, which can help close spatial economic girls, with every dollar invested yielding over four times the disparities. return in social and economic benefits. According to the study, implementing these interventions in Kenya with an 3.2 The Government of Kenya has shown investment of US$234 million over ten years could not only a strong commitment to advancing women's economic empowerment avert significant social issues—such as 120,000 teenage Kenya's commitment to advancing women’s economic pregnancies and over 8,500 instances of sexual violence— opportunities and gender equality is evident in its but also enhance educational outcomes by supporting robust policy and institutional frameworks. The national an additional 240,600 years of schooling. Ultimately, this development plan, Vision 2030 and the associated medium- could lead to an estimated US$918 million increase in term plans, prioritize gender equality and equitable access labor market productivity, illustrating the profound impact to opportunities as essential for sustainable development. and high returns of investing in adolescent girls within the These frameworks integrate policies supporting land framework of WEE. ownership equality, gender-based violence prevention, Economic empowerment of women is a key pathway equality in educational enrolment, addressing gender to gender equality, poverty reduction, and other discrimination in employment, and efforts to abandon societal benefits including addressing Kenya’s persistent female genital mutilation, among others, demonstrating a regional disparities. Girls’ and women’s economic comprehensive approach to gender equity. empowerment extend beyond financial independence by playing a central role in social, political, and emotional The Constitution of Kenya solidifies the foundation for empowerment.18 An economic empowerment approach gender equality and legislative measures, and various aims not only to enhance prospects for productive and governmental policies and initiatives complement well-compensated jobs but also to promote enabling these constitutional guarantees. The 2010 Constitution factors such as education, skills, and autonomy to allow girls advocates for equal rights and opportunities in political, and women to access and make the most of economic economic, cultural, and social spheres.22 It enshrines opportunities. Ultimately, this promotes growth, affirmative action principles, such as the two-thirds gender contributes to poverty reduction, and catalyzes a broad rule23, and mandates significant female representation in spectrum of societal benefits. Economically empowered political assemblies.24 Legislative measures complement women play active roles in household decision-making these constitutional guarantees by providing robust 16 World Bank (2024). “Pathways to Prosperity for Adolescent Girls in Africa.” Executive Summary booklet. World Bank, Washington, DC. 17 UNICEF (2024). Right on the money. Making the case for rights-based investments in adolescent girls. 18 World Bank. 2014. Voice and Agency: Empowering Women and Girls for Shared Prosperity. 19 World Bank. 2012. World Development Report 2012: Gender Equality and Development. World Bank. 20 World Bank Group gender strategy (FY16-23): gender equality, poverty reduction and inclusive growth (English). Washington, D.C.: World Bank Group; Kabeer, Naila. 2009. Women's economic empowerment: key issues and policy options. Sida Policy (SIDA51910en). Swedish International Development Cooperation Agency (SIDA), Stockholm 21 Evidence has suggested that expanding women’s access to productive resources, and promoting their participation and leadership in climate action, is associated to both a direct reduction of carbon dioxide emissions (UN Women, 2022), and better resource governance, conservation outcomes and disaster readiness (World Bank, 2022). 22 Republic of Kenya. (2010). Constitution of Kenya, 2010. Republic of Kenya. 23 Article 81(b) of the Constitution of Kenya states that “the electoral system shall comply with the principle that not more than two-thirds of the members of elective public bodies shall be of the same gender”. 24 The constitution requires that the national assembly consist of 47 elected women and that the senate comprise of 16 women members nominated by the political parties. December 2024 | Edition No. 30 17 Special Focus protections and empowering frameworks for significantly less, are more likely to work for no pay, and are women.25 The establishment of the National Gender and less likely to own assets. These disparities are particularly Equality Commission (NGEC) marks a significant step in pronounced among women from poorer backgrounds, institutionalizing regulatory efforts, ensuring ongoing rural areas, Arid and Semi-Arid Lands (ASAL) counties, and attention to gender equality in national development. In those with lower levels of education. Such gaps, which addition, targeted programs have been designed to enhance highlight the economic disadvantages faced by women in women's economic participation, facilitate women's entry Kenya, also undermine the country’s efforts to maximize its and expansion in entrepreneurship. productivity and accelerate inclusive growth. However, implementation gaps are evident, particularly Young women are more likely than men to be neither in in aspects like workplace, safety, and employment education nor employment post-childbirth, as reflected in the Women, Business The transition from secondary years to adult life and the Law (WBL) index. The latest WBL report (2024) represent a pivotal stage for economic engagement, highlights Kenya’s strong performance in laws related to yet it is during this phase that a significant divergence women's freedom of movement (mobility), pay equity, emerges between women and men in Kenya. Young and marriage. Areas needing improvement include the adults who are disengaged from both educational ‘parenthood’ indicator, which assesses paid maternity advancement and the workforce, termed as ‘Not in and paternity leave, dismissal protections, and cost Education, Employment, or Training (NEET), remain a coverage; the ‘workplace’ indicator, focusing on gender- global policy priority.27 Research across East and Southern based discrimination protections and flexible work Africa identifies three primary drivers for youth NEET status: arrangements; ‘childcare’ laws regulating availability, early marriage and childbearing, education-related factors, affordability, and quality; and ‘safety’ laws addressing child and labor related factors.28 For young women in particular, marriage, sexual harassment, and domestic violence.26 early marriage and engagement in unpaid family farming Moreover, lower scores from the supportive frameworks or household chores significantly contribute to their and expert opinions reflect that those legal frameworks increased NEET status.29 The consequences of being have not completely matched implementation, leaving NEET during young years are significant, often resulting important gaps. Persistent challenges, such as outdated in markedly poorer economic outcomes compared to land succession laws and delays in enforcing the two-thirds their engaged counterparts.30 Alarmingly, women make gender rule, highlight the need for effective translation of up two-thirds of the global NEET youth population, and these policies into actionable programs that effectively their disengagement from education and work tends enhance outcomes for women. to persist longer than that of young men.31 Moreover, a higher prevalence of NEETs in a generation correlates with 3.3 Significant gender gaps in economic reduced productivity levels, subsequently slowing overall outcomes persist economic growth and development.32 While the country has made strides in creating an enabling policy framework, these efforts have yet Gender disparities in economic engagement begin to to fully translate into gender equitable economic widen during adolescence. Using the Kenya Demographic outcomes. Findings from this analysis reveal enduring and Health Survey (KDHS) 2022 data, this analysis focuses on gaps: compared to their male counterparts, women are young adults categorized as ‘Not in Education, Employment less active in the labor market from young ages, earn or Training' (NEET). The data reveals that 38 percent of 25 The Employment Act of 2007, for example, prohibits workplace discrimination and guarantees paid maternity leave. This act aims to ensure women can combine childbearing responsibilities and participation in paid work, and promotes equal remuneration for equal work, though it sometimes inadvertently discourages the hiring of women of reproductive age. Other policies that promote gender equality and women’s empowerment include the 2009 National Land Policy which recognizes women’s rights to own property on an equal basis with men, the 2011 National Gender and Equality Commission Act, the 2014 National Policy for Prevention and Response to Gender Based Violence, the 2017 National Policy for the Abandonment of Female Genital Mutilation; the 2017 National Gender and Development Policy (NGAD), and the regulation of child marriage through the 2014 Marriage Act, 2014. In 2019, the National Policy on Gender and Development was adopted, outlining the national agenda for gender equality and setting legislative and administrative measures to address the existing gaps. 26 World Bank. 2024. Women, Business and the Law 2024. Washington, DC: World Bank. 27 Reducing the number of young people who are not in employment, education or training (NEET) is target 8.6 of the United Nations Sustainable Development Goals (UN DESA 2021). 28 UN Women (2022). The status of NEET. A quantitative analysis of youth not in employment education or training (NEET) (15 – 24 years old). 29 These findings exclude childbirth due to data availability. 30 Samoilenko, A., & Carter, K. (2015). Economic outcomes of youth not in education, employment or training (NEET) (No. 15/01). New Zealand Treasury Working Paper. 31 ILO (2024). Global employment trends for youth 2024. Decent work brighter futures 32 Székely and Karver, (2015). Youth Out of School and Out of Work in Latin America: A Cohort Approach. World Bank Policy Research Working Paper No. 7421, Washington, DC: World Bank. 18 December 2024 | Edition No. 30 Special Focus women aged 19 to 25 are neither in education, employment of being NEET but do not close the gender gap entirely. nor training, a proportion that is nearly four times higher While almost two-thirds (64 percent) of women with no than their male counterparts, standing at only 10 percent more than five years of education find themselves NEET, (Figure 19). This gender disparity becomes evident early, this figure drops to 39 percent among those with 6 to 10 starting from ages 15 to 19, where 12 percent of women years of education.33 For men, the corresponding figures can be categorized NEET, compared to only 4 percent of are 11 percent for those with up to five years of education men, and indicating the roots of this challenge begin well and 8 percent for those with 6 to 10 years, indicating that before adulthood. while education reduces the NEET rate for both genders, it Figure 19: Share of NEET in Kenya by age group and gender, 2022 is significantly more beneficial for women. Studying-Working Studying-Not working A lower share of women report being employed Not studying-Working Not studying-Not working (NEET) 100 Following the NEET patterns, and consistent with global trends, significant gender disparities in employment 80 status are observed. The 2024 World Employment 60 and Social Outlook report by the International Labor Percent Organization (ILO) emphasizes that while Sub-Saharan 40 Africa leads globally in female labor force participation, 20 the region faces persistent challenges with informality and underemployment.34 The report also highlights that 0 Female Male Female Male the gender gap in labor participation remains large, 15-18 19-25 particularly among young people. In line with these Source: Authors’ calculations based on the 2022 Kenya Demographic and Health Survey (KDHS). trends, analysis of the 2022 Kenya Demographic and Heath Survey (KDHS) data reveals that 3 in 5 women (60 percent) Certain demographic groups are more likely to fall aged 15 to 49 reported being employed in the past year, into the NEET category, with higher rates in rural areas compared to 4 in 5 men (81 percent). These employment compared to urban ones, among individuals with lower rates are lower in rural areas for both genders (56 percent income levels compared to those with higher incomes, of women and 79.2 percent of men) where the gender and particularly in Arid and Semi-Arid Lands (ASAL) difference becomes even more pronounced, compared counties. Parenthood and lower educational attainment to urban settings (65 and 83 percent, respectively). also exacerbate the likelihood of being NEET. Contrary to Although employment rates increase with age for both the trend amongst men, the rate of women being NEET men and women, the gap narrows slightly in older age escalates with each additional child, highlighting the impact groups (35 to 49 years) but remains consistently higher for of family obligations on women's economic participation. men across all ages (Figure 20a). Conversely, higher education levels reduce the likelihood Figure 20: Employment shares by gender a. Share of population employed by age group b. Share of population employed by education achieved Women Men Women Men 100 95.71 97.41 100 86.94 88.28 81.70 78.25 80 74.23 80 71.66 71.33 71.94 63.18 60 60 55.14 53.54 47.59 Percent Percent 40.76 40 40 14.93 20 20 0 0 15-18 19-24 25-34 35-49 No education Primary Secondary Higher Source: Authors’ calculations based on the 2022 Kenya Demographic and Health Survey (KDHS). 33 Based on reported employment, women with secondary education report higher labor force participation. 34 ILO (2024). World Employment and Social Outlook, Trends 2024. December 2024 | Edition No. 30 19 Special Focus Education mitigates gender disparities in employment Figure 21: Share of employment by occupation status but does not eliminate them. Higher educational 100 attainment positively impacts women's employment 90 rates and slightly narrows the gender gap, but a 80 significant disparity still exists (Figure 20b). This suggests 70 Field crops, vegetables and horticultural farmers that education alone is not sufficient to overcome the Shop assistants and Percent 60 demonstrators systemic barriers that keep women from achieving parity 50 Cleaners, launders and domestic workers in employment opportunities. 40 Street venders and related workers 30 Other occupations Marital and parental statuses influence employment 20 dynamics, highlighting gender-specific challenges, 10 particularly the disproportionate impact of family 0 Women Men responsibilities on women's economic participation. Source: Authors’ calculations based on the 2022 Kenya Demographic and Health Women who marry younger typically report lower Survey (KDHS). employment rates than those who marry after age 26 for advancement. Addressing this imbalance is critical (67 percent of those married at age 19 or before report to ensuring women’s broader participation in diverse employment compared to 77 percent of those married and higher-paying sectors, ultimately contributing to after age 26); for those marrying later, the disparity against their economic empowerment and reducing systemic male employment rates is lessened. Notably, men’s inequalities in the labor market. employment rates are not significantly affected by the age at which they marry (ranging only between 96 and Women experience a higher incidence of unpaid labor 98 percent). Parenthood increases employment rates for Women in Kenya are more likely to engage in unpaid both genders, but significant gaps persist and even widen labor than their male counterparts, with rural and with the number of children. Overall, women's economic younger women facing a greater gendered economic participation is hindered by the disproportionate burden burden. In addition to women’s lower economic of family responsibility. participation, a higher proportion of those working are unpaid, adding to their economic disadvantages. Analysis Half of women’s employment is concentrated in four of the 2022 KDHS reveals that 17 percent of employed occupations women reported not receiving any form of payment for Women’s participation in Kenya's labor market their work, nearly double the rate for men, which stands is concentrated in four occupations, suggesting at 9 percent. Unpaid labor is particularly prevalent in the occupational segregation and limiting their access to agricultural sector, where men and women report similar diverse economic opportunities. Data from the 2022 employment shares (28 and 26 percent, respectively). KDHS show that half of all employed women report work However, among those in agriculture, unpaid labor rises in field crop, vegetable, and horticultural roles (21 percent), sharply to 20 percent for men and 41 percent for women shop assistant positions (10.98 percent), as cleaners, (Figure 22a). In contrast, unpaid labor in non-agricultural launderers, and domestic workers (10.9 percent), or as sectors is significantly lower, affecting just 4 percent of men street vendors and related roles (8.02 percent). These roles and 9 percent of women. Women in rural areas face even collectively absorb fewer men, with 27.6 percent of them greater disparities, with unpaid labor disproportionately reporting employment in these same fields. Such patterns concentrated among them, especially among younger age of occupational segregation perpetuate existing gender groups (Figure 22b). This indicates a significant gendered disparities in earnings and economic security, particularly economic burden that rural and younger women bear, as these sectors typically engage lower-paying, informal, reflecting broader systemic inequalities that limit their and often precarious jobs, with limited opportunities economic opportunities and compensation. 20 December 2024 | Edition No. 30 Special Focus Figure 22: Unpaid employment a. Share of employed women and men reporting no payment b. Type of earnings for employed women by age and residence Agriculture Total Non-Agriculture Cash only Not paid 45 100 40.8 40 35 80 30 60 Percent 25 Percent 20.0 20 40 16.8 15 9.1 20 10 8.67 5 4.00 0 15-18 19-34 35-49 15-18 19-34 35-49 0 Women Men Rural Urban Source: Authors’ calculations based on the 2022 Kenya Demographic and Health Survey (KDHS). Box 5: Women experience a higher burden of unpaid care work Women bear a disproportionate burden of unpaid work. They spend more time than men in unpaid domestic and care work which can reduce the time they have for paid work. According to the 2021 Kenya Time Use Survey, on average, women in Kenya spend 18.7 percent (corresponding to approximately 5 hours) of their time each day in unpaid domestic and care work compared to 3.6 percent for men (corresponding to approximately 1 hour). This means women spent 5 times more time in unpaid domestic and care work than men. Similar patterns are observed in both rural and urban areas where women spend more time than men in unpaid work. Time spent on unpaid domestic care work is slightly higher for rural women at 16.5 percent compared to 15.9 percent for urban women. Women living in arid counties bear the greatest burden of unpaid care work. They spend an average of 6 hours a day on unpaid care work. Women living in Marsabit county spend the highest amount of time in unpaid domestic and care work. They spend 30.2 percent of their day on unpaid domestic and care work, representing approximately 7 hours. Other counties with a high share of unpaid care work include Wajir (26.8 percent), Samburu (24.2 percent), Mandera (23.8 percent) and Garissa (23.7 percent), all with women spending approximately an average of around 6 hours in unpaid work each day. Women aged 25 to 44 spend the highest amount of time in unpaid care work, closely followed by those aged between 15 and 24 years. Women aged 25 to 44 years spend, on average, 21 percent of their time each day in unpaid domestic and care work compared to 3.4 percent for men in this age group. Similarly, women aged between 15 and 24 years spend, on average, 19.1 percent of their time in unpaid care work compared to 4.2 percent for men. Figure 23: Percentage of time spent per day on unpaid domestic and care work by sex and age Total Female Male Female Male 20 25 18.7 18 16.3 21.0 16 20 19.1 14 16.4 12.2 15.9 12 10.7 Percent 15 10 Percent 12.0 8 6 10 3.6 3.2 4 2.4 2 1.5 4.2 0.4 5 3.4 3.6 3.2 3.3 0 Percent of time spent Percent of time spent Percent of time spent on unpaid domestic on unpaid on unpaid care work 0 and care work domestic work 15-24 25-44 45-54 55-64 65+ Source: KNBS, 2022: Kenya Time Use Report. December 2024 | Edition No. 30 21 Special Focus The earnings gap between men and women persists Figure 24: Difference between men’s and women’s earnings, by area of residence, education level and age Men in Kenya consistently report higher earnings than 120 women across various sectors and demographics, 100 95.3 99.0 education however significantly lowers this gap. The gender pay gap, persistent across East and Southern Africa 80 68.7 Percent according to a recent UN Women report, reflects broader 60 54.0 55.7 economic and workplace inequalities that women face.35 40 38.2 35.1 32.8 27.0 26.4 28.6 27.6 Analysis of the 2022 KDHS shows that men's earnings 20 are on average 38 percent higher than those of women. 0 This disparity is more pronounced in rural areas, where 15-18 19-24 25-34 19-34 35-49 Total Rural Urban Higher Primary Secondary No education men earn 69 percent more than women, compared to a 35 percent difference in urban areas. While the gap is Residence Education Age persistent across all age groups, it is higher among those Source: Authors’ calculations based on the 2022 Kenya Demographic and Health aged 35 to 49. In addition, the earnings gap widens across Survey (KDHS). those with lower levels of education, reaching 99 percent compared to married men. The gap increases for those for those with primary education. While it narrows among who marry younger and decreases significantly, sometimes men and women with more than secondary education, it even reversing, for women who marry after the age of 26 is still significant at 27 percent. (Figure 25a). The difference in earnings is also amplified by the number of children, reaching a very wide gap (192 The gender earnings gap is particularly stark in sectors percent) between men and women with five or more where women are predominantly employed. Over children. Interestingly, never-married women and those half of the employment captured in the 2022 KDHS is without children, tend to earn more on average than their concentrated in three broad categories: elementary male counterparts, highlighting again how familial roles occupations, skilled agriculture, fishery, and forestry, and can contribute to economic disparities. service, shop, and sales roles. Out of the total women employed, 68 percent are working in these occupations, There are disparities in asset ownership between men compared to 55 percent of employed men. While and women all assessed occupations present a gender disparity The gap in asset ownership between men and women in earnings, these sectors show some of the highest is substantial and indicative of deeper economic differences in earnings, reaching a gap as high as 131 inequalities, with a significantly lower proportion of percent in service, shops and sales. women owning key economic assets compared to men. For example, only 3 percent of women aged 15 The gender earnings gap widens with marriage and to 49 report owning agricultural land independently, in increases with each additional child. Married women contrast to 24 percent of men within the same age group. experience a widened earnings gap of 51 percent Similar disparities are observed in the ownership of houses Figure 25: Difference between men’s and women’s earnings a. Earnings gap between men and women by age of marriage b. Earnings gap between men and women by number of children 230 210 192.0 183.7 190 150 160 Percent 110 110 Percent 95.8 81.8 70 60 42.9 28.0 30 10 -10 -7.6 -9.3 -40 -28.3 10-14 15-19 20-25 26-46 Never married 0 1-2 3-4 5+ Source: Authors’ calculations based on the 2022 Kenya Demographic and Health Survey (KDHS). 35 UN Women, (2023). Why Women Earn Less: Gender Pay Gap and Labour Market Inequalities in East and Southern Africa. 22 December 2024 | Edition No. 30 Special Focus and non-agricultural land (Figure 26). The gender gap promoting women’s land rights and access to improved extends to technological and financial assets, although technologies can increase their productivity.37 Similarly, with a narrower margin. Women's ownership and usage access to financial assets is correlated with improved rates of bank accounts, mobile phones, and smartphones economic outcomes,38 and property ownership enhances are consistently lower than those of men, though the women's bargaining power within their households and differences are less pronounced compared to land and communities.39 Asset ownership is pivotal, recognized as home ownership. one of the three primary factors influencing WEE in Sub- Saharan Africa, alongside education and employment.40 Figure 26: Share of women and men by ownership of assets Women Men Women from arid and semi-arid counties encounter 100 90 distinct economic challenges 80.4 77.5 80 The economic disadvantages faced by women in Kenya 70 are even more pronounced among those residing in 60 ASAL counties. Women aged 19 to 25 from these regions Percent 49.1 50 42.7 40 34.7 32.0 exhibit significantly higher rates of being NEET than their 30 24.3 21.9 counterparts from non-ASAL counties—44.1 percent 20 compared to 34.3 percent, respectively (Figure 27a). This 10 4.5 6.4 3.1 1.4 0 trend becomes apparent earlier in life, with young women Owns Owns Owns non- Owns and Owns Owns a house agricultural agricultural uses a mobile smart aged 15 to 18 in ASAL counties being nearly three times alone land alone land alone bank account phone phone more likely to be NEET compared to those in non-ASAL Source: Authors’ calculations based on the 2022 Kenya Demographic and Health regions. Employment and earning disparities further Survey (KDHS). exacerbate the economic isolation of ASAL women. Limited asset ownership diminishes women's economic Although men from these areas show only marginally autonomy and potential. Ownership of assets such as lower employment rates across all education levels land, housing, and financial assets is crucial for economic compared to men from non-ASAL areas, for ASAL women, security and independence, impacting women's ability to higher education levels are associated with greater engage in and benefit from economic activities effectively. participation in employment (Figure 27b). Furthermore, This disparity not only reflects existing economic the gap in earnings between men and women is wider in inequalities but also perpetuates them, as asset ownership ASAL areas, with women earning on average 41 percent is critical for leveraging economic opportunities and less than men, compared to a 37.9 percent gap in non- securing financial stability.36 Research indicates that ASAL counties. Figure 27: Activity outcomes, ASAL vs non-ASAL counties a. Share of NEE b. Share of population employed by level of education Not studying Working Studying Not working Non-ASAL-male ASAL-male Non-ASAL-female ASAL-female Studying Working Not studying-Not working (NEET) 100 100 90 90 80 80 70 70 60 60 Percent Percent 50 50 40 40 30 30 20 20 10 10 0 Male Female Male Female 0 No education Primary Secondary Higher ASAL Non-ASAL Source: Authors’ calculations based on the 2022 Kenya Demographic and Health Survey (KDHS). 36 UN WOMEN, (2018). Building assets—digital, financial and property. Working group paper. UN Secretary-General High-Level Panel on Women’s Economic Empowerment. 37 Kelkar, G. (2020). Gender and productive assets: Implications for women’s economic security and productivity. In Women, Land and Power in Asia (pp. 60-83). Routledge India. 38 Adera, A., & Abdisa, L. T. (2023). Financial inclusion and women’s economic empowerment: Evidence from Ethiopia. Cogent Economics & Finance, 11(2), 2244864. 39 Mishra, K. and Sam, A. G. (2016). Does women's land ownership promote their empowerment? Empirical evidence from Nepal. 40 Williams, E. et al., (2022). Women’s economic empowerment in sub-Saharan Africa: Evidence from cross-national population data. Demographic Research, 47, 415–452. December 2024 | Edition No. 30 23 Special Focus The economic challenges faced by women in ASAL communities. Refugee women’s employment rate is just counties are intensified by high and persistent poverty. 19 percent, far below the 52 percent of women in host Despite a nationwide decline in poverty rates over the communities. They are also more likely to be engaged in past decade, arid areas have experienced only a modest unpaid labor, spending twice as much time on childcare reduction. About 69.2 percent of the population in arid and household chores—32 hours per week (about 5 areas lived in poverty (measured at the national poverty hours daily) compared to 15 hours weekly (about 2 hours line) in 2021, significantly higher than 41.2 percent in daily) for host women. Sociocultural norms are significant semi-arid areas and 32.9 percent in non-ASAL countries.41 and might restrict refugee women and girls from full This disparity is stark considering that arid regions, economic participation. Refugee women, for example, are making up about 10 percent of Kenya's population, more accepting of early marriage and wife-beating, and represent 20 percent of its poor. These counties, that host have less control over sexual decisions compared to host a disproportionate number of Kenya's poor, have been communities. While 81 percent of female hosts consider historically underdeveloped in part due to agroclimatic the ideal marriage age to be over 21, only 37 percent of challenges and limited access to services. This entrenched refugee women share this view, with most (51 percent) poverty and inequity create very specific barriers for believing the acceptable age is between 18 and 21. Only women’s economic participation, highlighting the critical 42 percent of female refugees feel empowered to refuse need for targeted interventions to address both gender sex with a partner, compared to 71 percent of female hosts. disparities and broader challenges of underdevelopment While these findings echo the broader trends of economic and poverty in these regions. exclusion faced by women in Kenya, they present the unique vulnerabilities of refugee women. Refugee women face amplified barriers to economic empowerment Geographic and structural barriers further deepen the Refugees and asylum seekers are a vital component of economic isolation of refugee women. Nearly 87 percent Kenya’s social, cultural, and economic fabric. According of Kenya's refugee population resides in camps located in to the United Nations High Commissioner for Refugees Turkana and Garissa, ASAL regions already burdened by (UNHCR) data, as of October 31, 2024, Kenya hosts 812,910 high poverty rates and scarce economic opportunities. registered refugees and asylum seekers who live in Urban refugee women, while still marginalized, report designated camp areas and urban areas.42 The designated comparatively better economic outcomes than their camp- camp areas are Kakuma Refugee Camp and Kalobeyei based counterparts, suggesting how the intersection of Integrated Settlement in Turkana County, as well as the refugee status, gender, and geographic disadvantage Dadaab Refugee Complex in Garissa County, collectively intensifies existing barriers to income generation. hosting 86 percent of refugees. Urban areas, including Tackling these challenges is essential—not only to reduce Nairobi, Mombasa, and Nakuru, host the remaining share. inequalities but also to integrate refugee women into Notably, women constitute approximately 49 percent of broader economic empowerment strategies. registered refugees, with women and children together Figure 28: Share of men and women aged 18-64 years who are comprising 77 percent of the refugee population. With employed 100 continued displacement driven by regional violence, Percent of individuals aged 18-64 years conflict in neighboring countries, and environmental 80 74 crises, the influx of refugees is expected to continue. 60 52 Refugee women face unique socioeconomic challenges, 40 often more severe than those in host communities, 27 limiting their economic empowerment. Recent data 20 19 from the Kenya Longitudinal Socioeconomic Study of 0 Refugees and Host Communities (K-LSRH)43 highlights Men Women Men Women that 57 percent of female refugees aged 19–25 are neither Refugees Hosts in school nor employed, compared to 53 percent in host Source: Authors’ calculations based on the 2023 Kenya Longitudinal Socioeconomic Study of Refugees and Host Communities (K-LSRH). 41 World Bank (2023). Kenya Poverty and Equity Assessment 2023. From poverty to prosperity: making growth more inclusive in Kenya. 42 File: ///C:/Users/wb449822/Downloads/Kenya%20Infographics%2031%20October%202024.pdf 43 Conducted between June 2022 and 2023, the Kenya Longitudinal Socioeconomic Study of Refugees and Host Communities (K-LSRH), is a nationally comparable survey of registered refugees and hosts in Kenya, offering detailed insights into the living conditions and challenges for both refugee and host communities. It is prepared under the Kenya Analytical Program on Forced Displacement (KAP-FD). KAP-FD is implemented by the World Bank, UNHCR, and Center for Effective Global Action (CEGA) at the University of California, Berkeley. It is funded by the Government of the Netherlands through the Partnership for Improving Prospects for Host Communities and Forcibly Displaced Persons (PROSPECTS). 24 December 2024 | Edition No. 30 Special Focus Figure 29: Highest educational level attained among individuals Early childhood development outcomes have improved, aged 25-64 years laying the foundation for positive socioeconomic outcomes No education Primary Secondary Higher 100 3 throughout the life cycle; however, challenges related to 11 13 quality and inequities must still be addressed Percent of individuals aged 18-64 years 25 31 80 21 Kenya’s early childhood development (ECD) outcomes 36 60 have improved during the past 20 years, driven by 36 41 increased access to health, nutrition, and education 40 21 64 services. In particular, progress in children’s nutrition and 19 20 13 mortality reduction has been remarkable: the country’s 32 14 20 rate of stunting was reduced almost by half between 0 Men Women Men Women 2008/09 and 2022, and the under-five mortality rate by Refugees Hosts 33 percentage points during the same period (Figure 30). Source: Authors’ calculations based on the 2023 Kenya Longitudinal Socioeconomic However, they remain high.44 Kenya has seen important Study of Refugees and Host Communities (K-LSRH). increases in immunization rates, use of antenatal care 3.4 The persistent gender economic gaps are from skilled provider and delivery of children in health shaped by several interdependent factors that manifest across the life cycle facilities, surge in birth registrations, and pre-school enrolment. Pre-primary education coverage, another key Several factors contribute to the significant gendered indicator of ECD, has steadily increased over the years. economic disparities present in Kenya. Analysis of From 2009 to 2018, the enrolment rate increased from the 2022 Kenya Demographic and Health Survey 56 to 77 percent, and despite the conditions under (KDHS), complemented by existing literature, identifies the pandemic, the number of children enrolled in pre- five pivotal areas—early childhood development, educational attainment, age at family formation, sexual primary increased annually from 2019 to 2021, rising from and reproductive health outcomes, and social norms— 2.74 to 2.85 million children.45 Likewise, the last available as fundamental to understanding women's economic data on early proficiency shows an improvement from outcomes in Kenya. These factors align with the life cycle 2016 to 2018 in both mathematics and reading, although approach, which posits that empowerment evolves at still at low levels.46 different stages of life, from early childhood through adolescence, youth, and into adulthood. These factors not While improvements in early childhood development only limit women’s participation and success in the labor (ECD) outcomes have created conditions for positive market but also interact in complex ways to perpetuate long-term impacts,47,48 significant challenges remain systemic inequalities. This analysis is set against a context in addressing quality and inequity. The rapid expansion where labor market demand is characterized by high levels of access, coupled with population growth, has strained of informality, sectoral segregation, and limited access infrastructure and resources, negatively impacting service to quality jobs for women. These structural constraints quality. For example, healthcare quality declined between exacerbate the supply-side barriers identified, further 2013 and 2018, with a shortage of qualified professionals, restricting women’s opportunities to achieve economic particularly in rural areas.49 In pre-primary education, an parity with men. insufficient number of trained teachers and inadequate learning materials have contributed to declining service quality.50 In addition, significant geographic and socioeconomic disparities exist, with higher stunting rates in rural areas and among the poorest households, and disparities in the Early Childhood Development Index 2030, 44 According to thresholds as defined in UNICEF/WHO/World Bank Joint Child Malnutrition Estimates, 2021 Edition, and, United Nations Inter-Agency Group for Child Mortality Estimation (UN IGME), 2023. 45 Since the introduction of the Competency-Based Curriculum (CBC) in 2019, the methodology to account for the number of children has changed, and enrolment rates are not comparable. 46 Since the introduction of the Competency-Based Curriculum (CBC) in 2019, the methodology to account for the number of children has changed, and enrolment rates are not comparable. 47 KNEC (2020). Monitoring learner achievement at class 3 level of primary school education in Kenya. 48 Heckman, J. (2008). The case for investing in disadvantaged young children. 49 Okoroafor, S. C., et al., (2022). Investing in the health workforce in Kenya: trends in size, composition and distribution from a descriptive health labour market analysis. BMJ Global Health, 7(Suppl 1), e009748. 50 MoE (2023). Basic Education Statistical Booklet 2020. December 2024 | Edition No. 30 25 Special Focus Figure 30: Evolution of ECD outcomes in Kenya a. Percentage of children under age 5 who are malnourished b. Deaths per 1,000 live births in the 5-year period before the survey Overweight Wasted Underweight Stunted Neonatal mortality Infant mortality Underweight 45 140 40 40 38 115 36 120 111 35 35 96 100 90 30 26 74 77 74 80 25 62 61 19 18 18 52 20 60 52 16 16 41 15 39 11 10 40 32 10 7 7 6 7 33 31 4 5 20 28 26 28 5 22 21 6 6 6 5 4 3 0 0 1993 1998 2003 2008-09 2014 2022 1989 1993 1998 2003 2008-09 2014 2022 KDHS KDHS KDHS KDHS KDHS KDHS KDHS KDHS KDHS KDHS KDHS KDHS KDHS Source: KNBS (2023). Demographic and Health Survey 2022. Note: Data from 2003 and later are nationally representative, while data collected before 2003 exclude the North Eastern region and several northern districts in the Eastern and Rift Valley regions. which shows better development outcomes in urban are more educated than their older counterparts (35 to 49 areas and for children with more educated mothers or years), reflecting a positive trend in educational attainment wealthier families.51 over generations. The proportion of uneducated individuals among the younger age group has significantly The lack of adequate, quality childcare limits children's decreased, with only 15.9 percent reporting no formal development and hinders women's empowerment and level of education achieved compared to 37.2 percent in economic opportunities. While pre-primary education the older group. However, this improvement is not uniform for children aged 4 and 5 has improved, childcare for across all demographics (Figure 31). Important disparities children under 3 remains insufficient, especially in exist, particularly in the lowest income quintiles and in informal settlements and agricultural areas, with the issue arid counties such as Mandera, Turkana, and Marsabit, being more pronounced for women with children with where educational challenges are most acute. These disabilities. The early years are crucial for brain and physical areas exhibit the highest rates of individuals without any development, shaping cognitive skills and laying the formal education, highlighting the uneven distribution of foundation for human capital, a key element of women’s educational progress across the country. empowerment. In sum, investing in ECD, such as offering Figure 31: Highest educational level attained by age group and childcare, can significantly benefit both women's economic selected demographics, 2022 Tertiary Secondary Primary No education empowerment and children's development. It is essential 100 for long-term outcomes and economic growth. 90 80 While educational progress has been made, and holds 70 potential for boosting economic equality, women continue 60 Percent to lag behind men 50 40 Educational progress is evident in Kenya, with a better 30 educated younger cohort. Kenya’s commitment to 20 10 increase access and gender equality in education has 0 materialized into several important reforms and programs; Urban Rural Poorest Richest Urban Rural Poorest Richest 19-34 35-49 as a result, the Kenyan education system has absorbed Source: Authors’ calculations based on the 2022 Kenya Demographic and Health over five million students since 2005 with gender parity Survey (KDHS). reached at both primary and secondary education levels. Despite substantial educational advancements, women Secondary education has had the most significant increase continue to lag men in educational attainment. Across in enrollment, with four times the number of students all demographics, the proportion of women who have in 2022 compared to 2005.52 Analysis of the 2022 KDHS received no formal education exceeds that of men. indicates that, in effect, younger Kenyans (19 to 34 years) While there has been a noteworthy narrowing of the 51 KNBS (2023). Demographic and Health Survey 2022. 52 KBNS - Economic Survey (2023; 2016; 2011; 2008). 26 December 2024 | Edition No. 30 Special Focus gender education gap, especially among the younger However, gains in educational access alone are not population, significant disparities remain, particularly enough to ensure economic equality. Despite the clear in economically disadvantaged, rural and arid areas. benefits of education, its potential to fully translate into For example, while the national average of uneducated equitable economic opportunities remains underrealized. women aged 19 to 34 stands at 17 percent, this figure In Kenya, girls consistently outperform boys in most escalates to 51.3 percent among women from the assessments at the primary level, yet this trend reverses poorest income quintile (Figure 32a). In counties like during adolescence, with girls underperforming at the Turkana, Marsabit, Tana River, Wajir, and Mandera, over secondary level, particularly in mathematics.54 This shift, two-thirds of women aged 19 to 34 lack formal education, occurring at a critical stage of skill development, limits compared to lower percentages among men. In these girls' opportunities to transition into higher-paying and counties, contrary to the reversed gap occurring at a male-dominated fields such as STEM, creating a direct link national level,53 there are also disparities disadvantaging between education performance and future economic girls in secondary education enrollment rates, suggesting prospects. In addition, persistent social barriers, such as a deep-rooted intergenerational challenge. gender stereotypes, limited decision-making autonomy, and unequal access to resources, continue to hinder the Education has the potential to boost individual economic empowerment of women. These challenges earnings: each additional year of schooling can increase are exacerbated in settings where traditional roles earnings by 16 percent, with women benefiting the and expectations disproportionately burden women, most. Education is universally acknowledged as a crucial emphasizing the need for comprehensive strategies that determinant of economic outcomes. Findings indicate address both educational and socio-cultural barriers to returns to schooling continue to be significantly high in achieve true gender equality in economic participation. low and middle-income countries (LMIC) despite rising average levels of schooling attainment, suggesting that Marriage and parenthood not only influence labor market the demand for skills has been increasing while the supply participation but also widen the gender earnings gap rose. Each additional year of schooling can increase female Early marriage and parenthood have profound earnings by 17.1 percent compared to an increase of 13.3 implications for women’s economic outcomes, often percent in male earnings. These estimates show the critical serving as pivotal points where gender disparities in link between educational attainment and economic status, economic participation and earnings widen. Unlike men, particularly for women. who generally experience limited economic disruptions Figure 32: Share of uneducated population by age group and gender, 2022 a. 19 to 34 b. 35 to 49 Men Women Men Women 60 90 81.5 51.3 80 50 42.7 70 66.2 40 60 51.4 Percent 50 Percent 30 23.9 40 36.6 21.8 20 30 25.2 9.2 20 16.3 10 5.9 11.6 4.4 2.4 10 6.4 0 Rural Urban Poorest quintile Richest quintile 0 Rural Urban Poorest quintile Richest quintile By location By wealth quintile By location By wealth quintile Source: Authors’ calculations based on the 2022 Kenya Demographic and Health Survey (KDHS). 53 Our analysis of the Kenya Demographic and Health Survey (KDHS) reveals that nationally, across both rural and urban settings, girls aged 14 to 17 are attending secondary education at higher rates than boys. This trend, reflecting a 'reversed gap' where boys are becoming increasingly disengaged from education—particularly at upper secondary levels—is not unique to Kenya but part of a broader global pattern (see Jere, C., Eck, M., & Zubairi, A. (2022). Leave No Child Behind: Global report on boys' disengagement from education. UNESCO). To address this, it's crucial for Kenya to not only celebrate the strides made in female education but also to ensure that educational engagement is bolstered for both genders. Enhancing the quality of education is pivotal in keeping all students engaged, thereby preventing the potential widening of educational disparities and their long- term economic consequences. 54 Based on the analysis of the following assessments: the Kenya Certificate of Primary Education (KCPE), the new Kenya Primary School Education Assessment (KPSEA), the Kenya Certificate of Secondary Education (KCSE), the 2018 baseline and 2022 midline Monitoring Learner Achievement (MLA), and the 2023 AMPL-ab (Assessment for Minimum Proficiency levels a and b). December 2024 | Edition No. 30 27 Special Focus upon marriage or parenthood, women frequently bear the Similarly, almost half of women from the poorest wealth dual burden of unpaid domestic responsibilities and limited quintile experienced early marriage, against 10 percent of access to opportunities for formal and better-paying men from the same economic background; and in rural jobs. Evidence consistently highlights how early marriage areas, 35.9 percent of women were married by age 19 and childbearing correlates with poorer economic compared to 6.7 percent of men. outcomes for women, often locking them into cycles of low productivity, and reduced income, with negative Despite recent advancements, teenage pregnancy consequences for both girls and their children across various continues to be prevalent, with the most vulnerable domains.55 These dynamics are affected by socio-cultural girls being disproportionately affected. Almost a third of norms and economic pressures that disproportionately push women in Kenya, aged 15 to 49 have ever been pregnant girls into family roles at young ages. at a young age. This continues to be an issue nationally, as 15 percent of adolescent girls (aged 14 to 19) start In Kenya, women often begin family responsibilities childbearing before reaching adulthood. This figure much earlier than men. In 2022, about 31 percent of girls presents a significant reduction from 2014 when it was at aged 19 were already married or had children. This early 18 percent. However, girls from the most disadvantaged initiation into family roles is even more common among backgrounds are worse off. Teenage pregnancy rates are girls from rural areas and the poorest wealth quintiles, particularly high among girls coming from the poorest where the figures rise to 35.5 percent and 49 percent, households (26 percent of teenagers from the poorest respectively. In contrast, the rates for girls from urban areas income quintile against 10 percent in the wealthiest), and and the wealthiest quintiles stand at 23.9 percent and 12.4 for those that are not educated (38 percent against 12 percent, respectively. This indicates a clear socioeconomic percent for those with secondary education or more), while gradient in early family formation, especially when the difference between teenage girls from urban and rural compared to a particularly lower proportion of their male areas is small (18.5 percent, against 17.3 in urban areas). counterparts (Figure 33). Disparities across counties are even more pronounced, with almost half of adolescent girls in Samburu having Women tend to marry younger than men, especially ever been pregnant compared to only 5 percent in Nyeri those less educated and more economically or Nyandarua (Figure 34). disadvantaged. While only 5.5 percent of men aged 25 to 49 were married by age 19, the figure for women is Social norms not only shape women’s sexual and substantially higher at 29.4 percent. This discrepancy reproductive health outcomes but also limit their economic widens further among women from socioeconomically potential disadvantaged backgrounds. For instance, almost 6 out of Social norms are pivotal in shaping gender outcomes 10 women without formal education were married by age across the lifecycle, deeply influencing women's 19, compared to just 13 percent of their male counterparts. economic and health outcomes.56 Entrenched social Figure 33: Marital and parental status by age and gender Figure 34: Teenage pregnancy in Kenya, 2022 Not married-no children Not married-with children 60 Married-with children Married-no children 50.1 50 100 90 40 37.8 36.3 Percent 80 30 29.4 70 21.1 60 20 16.0 Percent 12.1 50 10 7.1 7.3 4.8 5.2 4.5 40 0 30 Richest Rural Urban Uneducated More than secondary Samburu West Pokot Marsabit Kirinyaga Nyandarua Nyeri Poorest 20 10 0 Women Men Women Men Women Men Women Men Women Men Women Men Women Men Women Men Wealth Location Education Top & bottom counties 15 16 17 18 19 20 21 22 quintile attaintment Source: Authors’ calculations based on the 2022 Kenya Demographic and Health Source: Authors’ calculations based on the 2022 Kenya Demographic and Health Survey (KDHS). Survey (KDHS). 55 World Bank (2024). Pathways to Prosperity for Adolescent Girls in Africa. 56 As consistently recognized by a range of theoretical and empirical literature. (See for example Jayachandranm, S (2021) Social norms as a barrier to Women’s Employment in Developing Countries; Bussolo, M., et al. (2024). Social Norms and Gender Disparities with a Focus on Female Labor Force Participation in South Asia. The World Bank Research Observer, 39(1), 124-158.) 28 December 2024 | Edition No. 30 Special Focus norms drive disparities in sexual and reproductive health limitation in decision-making is more pronounced among outcomes, affecting educational attainment and early unemployed women (39.7 percent) and is significantly family formation, and influencing women's economic higher in rural areas (36.7 percent) compared to urban outcomes. These norms perpetuate traditional gender areas (29.4 percent). Women’s restricted participation in roles within households and communities, setting rigid crucial household decisions affects their personal and expectations and limiting access to resources and decision- economic autonomy. making power. Analysis of the influence of these deeply embedded societal expectations on women’s health and Likewise, women report limited agency over their autonomy reveal the complex interplay between personal reproductive health decisions. A significant portion of health choices and systemic constraints, suggesting how women, 35 percent of currently married women, report social norms not only shape but also restrict women’s lives being unable to independently make decisions about and economic potential. sexual relations, contraceptive use, and reproductive healthcare. This figure rises to 41.6 percent for rural Normative pressures significantly restrict women’s women and 54.4 percent for women from the poorest autonomy. Data on self-reported participation in wealth quintile. As a result, there is still a notable unmet household decisions, captured in the 2022 KDHS, indicate need for family planning in Kenya, particularly for younger about 34 percent of women report lacking participation women. Despite a national decrease in the fertility rate in decisions regarding their own healthcare, major from 3.9 in 2014 to 3.5 in 2022, important variations across household purchases, and family visits (Figure 35). This demographics exist, with women from the poorest quintile Figure 35: Share of currently married women aged 15-49 reporting having an average fertility rate of 5.3, compared to 2.7 for not participating in specific decisions the richest quintile. In addition, while the overall fertility rate stands at 3.5 children per woman, the desired fertility Women's own health care 14.0 rate is lower at 2.9, indicating a gap between actual and preferred family sizes. Visits to family relatives 18.0 Social norms also play a role in the acceptability of Major household purchases 22.0 gender violence, perpetuating harmful conditions for women. Gender-based violence (GBV) is another All these decisions 34.0 severe consequence of discriminatory social norms, reflecting and reinforcing deep-rooted gender power 0 5 10 15 20 25 30 35 40 Percent imbalances.57 Nationally, 34 percent of women have Source: Authors’ calculations based on the 2022 Kenya Demographic and Health experienced physical violence since the age of 15, with Survey (KDHS). many cases going unreported due to societal stigma and Figure 36: Gender-based violence in Kenya, 2022 a. Prevalence of physical violence against women by specific b. Acceptance of wife beating by specific demographic groups demographic groups Age 40-49 41.7 31.9 Age group Age group Age 40-49 42.7 Age 15-19 19.5 39.6 Age 15-19 48.2 32.5 Ever married 37.0 Ever married 44.4 Marriage Marriage status status 35.3 Never married 19.8 Never married 39.1 51.8 Poorest quintile 36.9 Poorest quintile 62.7 quintile Wealth quintile Wealth 20.5 Richest quintile 28.1 Richest quintile 23.8 0 10 20 30 40 50 0 10 20 30 40 50 60 70 Percent Percent Source: Authors’ calculations based on the 2022 Kenya Demographic and Health Survey (KDHS). 57 UNDP (2023). Practical Approaches to Women’s Economic Empowerment Implementation as a Gender-Based Violence Intervention Strategy. A Guide to Developing Women’s Economic Empowerment Initiatives. December 2024 | Edition No. 30 29 Special Focus the normalization of such violence. This represents an the prevalence of FGM seems to be geographically important decrease since 2014, estimated at 45 percent, concentrated, with more than half of women in some but remains high. The prevalence of GBV is higher among northern and eastern counties having suffered from older women, those from lower economic backgrounds, this practice (Figure 37). The belief that FGM is a cultural and in certain regions, demonstrating how pervasive and requisite remains high among these groups, illustrating the accepted these practices are within various demographics powerful influence of social norms on harmful practices (Figure 36a). Perpetrators of physical violence are usually which have long-term impacts on women's health, women’s current (53.9 percent) or former (33.7 percent) autonomy, and economic opportunities. intimate partners. This widespread violence perpetuates gender inequality and is supported by societal norms that Together, these factors interact to influence women's economic outcomes justify such abuse: 42 percent of women and 36 percent of men believe that wife beating is justified under certain Employing probit regression models, the socio- circumstances. Surprisingly, a larger share of the younger demographic factors identified above demonstrated population (aged 15 to 19) agrees with wife beating substantial and statistically significant correlations with compared to other age groups, suggesting that social women’s economic outcomes. To explore the interplay norms against women’s integrity are being perpetuated in between sexual and reproductive outcomes, social norms, Kenya (Figure 36b). The data also shows that help-seeking and women’s economic opportunities, while accounting behavior is notably low, intensifying the challenges faced for demographic factors such as place of residence, a by women in abusive situations. series of models were conducted (Box 6). The findings reveal clear patterns: early marriage, early motherhood, Despite a decline in its prevalence, the practice of female and the prevalence of conservative social norms are genital mutilation (FGM) continues to affect a significant consistently linked to poorer economic outcomes for portion of women, supported by deep-rooted cultural women, including lower employment rates, reduced acceptance. As of 2022, 15 percent of women were earnings, and a higher likelihood of unpaid labor. These affected by FGM, a decrease from 38 percent in 1998. results highlight the structural barriers women face in However, specific segments of girls and women in Kenya translating educational and personal aspirations into continue to face harm. Rural women have experienced economic agency. Particularly significant is the persistent FGM in higher proportion than urban women (18.4 and disparity in life trajectories, as women in Kenya continue 9.7 percent, respectively), as well as those from the poorest to marry and give birth at much younger ages than men, wealth quintile compared to the richest (32 and 6.6 reinforcing their economic disadvantages. percent). In addition, 56.3 percent of uneducated women have undergone FGM, compared to only 12.5 percent Early marriage is associated with worse economic of those with primary education or more. Importantly, outcomes for women. Women who marry before the age of 19, compared to those marrying at 25 or older, appear Figure 37: Share of women circumcised by county to encounter several economic challenges. These women are less likely to be employed and exhibit lower earnings. This association may reflect disruptions in education and training due to early marital responsibilities, and a limited participation in higher-paying job markets. Moreover, a higher likelihood of engagement in unpaid labor is observed among women who marry early. This trend highlights the continuation of traditional roles in informal or familial labor settings that do not provide financial compensation. Marrying early is also associated with higher participation in employment in agriculture Percent and domestic roles, sectors characterized by lower wages (51.97] (19,51] and less security. The tendency to occupy these roles (7,19] may be reinforced by prevailing social norms around (2,7] [0,2] suitable employment for women, which often limits their Source: Authors’ calculations based on the 2022 Kenya Demographic and Health economic opportunities. Survey (KDHS). 30 December 2024 | Edition No. 30 Special Focus Box 6: Using regression models to examine the economic impacts Building on the socio-demographic factors identified in previous sections, probit regression models were employed to quantify their economic impacts on women. Two probit models and one ordinary least squares (OLS) model were analyzed to discern distinct influences on economic outcomes. The first model focused solely on the impact of age at marriage, intentionally excluding the effect of age at first birth to isolate this variable's specific contributions. Conversely, the second model assessed the effect of age at first birth on economic outcomes without the confounding influence of age at marriage. An additional OLS model evaluated how both age at marriage and age at first birth influence earnings. Integrating key variables such as age at marriage, age at first birth, and number of children, the analysis examined how these factors affect women's economic opportunities, including employment, earnings, payment types, and participation in agriculture and domestic roles versus other economic activities. In a second step, the model incorporated proxies for social norms from the 2022 Kenya Demographic and Health Survey, including attitudes toward wife-beating, autonomy in household decisions, reproductive health decisions, and views on female genital mutilation (FGM). These factors were synthesized into a composite index using principal component analysis (PCA), reflecting the broader societal pressures that shape economic behaviors. It is important to note that while measuring individual attitudes and behaviors sheds light on the presence of norms (Samman, 2019), there are significant limitations. Notably, there is a lack of consideration for beliefs about others' behaviors, a key aspect of social norms (Rost et al., 2021). Additionally, survey responses may be subject to social desirability bias, where respondents answer according to perceived societal expectations. To account for the well-documented benefits of education, educational attainment was introduced in the final step of the models. This inclusion allows for the isolation of social and familial factors from the direct impact of education on economic outcomes, providing a clearer view of each element's unique contributions. An early age at first birth is linked to lower economic the necessity of accepting lower-paid or part-time work to outcomes for women, indicating a significant accommodate childcare needs. The data also indicates an correlation between the timing of the first birth and increase in the likelihood of women engaging in unpaid their economic prospects. Women who experience labor as the number of children grows, and an increased their first birth at or before the age of 19, in comparison likelihood of women with more children working in the to those whose first birth occurs at age 25 or older, agriculture sector, which often involves flexible, familial, typically show diverse economic impacts. Interestingly, and informal labor arrangements that can accommodate women who gave birth early are slightly more likely to childcare but typically offer lower earnings and less security. be employed. This counterintuitive finding suggests that while early motherhood may limit educational Restrictive social norms negatively impact women’s opportunities, it might also push women into the labor economic outcomes. Women displaying adherence market, often in less secure and lower paying roles. to restrictive gendered social norms58 are less likely Despite being more likely to be employed, the earnings to participate in employment and earn lower wages of women with early first births are notably lower. This when they do. This association highlights how societal suggests that the types of jobs available to them may expectations can limit women's economic opportunities. offer limited financial benefits. There is also a higher These norms are also positively correlated with women’s propensity for engagement in unpaid labor among likelihood of working in sectors like agriculture and these women. In addition, like early marriage, early domestic services. These fields often feature lower pay motherhood is associated with higher likelihood of and fewer advancement opportunities, reinforcing employment in agriculture and domestic sectors. economic disparities. The relationship between restrictive social norms and negative economic outcomes remains The economic burden of childbearing is evident, as significant even when controlling for other variables. This each additional child a woman has is associated with a indicates a robust effect of societal attitudes on women's reduced probability of employment and lower earnings. economic lives. Even after accounting for the number This suggests that increasing family size places additional of children, the influence of restrictive norms continues demands on women's time, likely detracting from their to negatively correlate with employment and earnings. ability to participate in the workforce. Similarly, women This suggests that societal expectations compound the with more children tend to earn less, potentially due to economic challenges faced by mothers. 58 The four selected proxies for social norms are integrated into our models as a composite index, constructed via Principal Component Analysis (PCA). In this index, a higher value denotes more regressive attitudes. While the composite index overall is negatively associated with both employment and earnings, individual analysis reveals that regressive attitudes towards wife beating are linked with higher employment rates but lower earnings. This contradiction highlights that simply participating in the workforce may not be sufficient to challenge entrenched norms that perpetuate power imbalances. Additional research is imperative to fully understand how gender-based violence (GBV) impacts women’s economic empowerment. December 2024 | Edition No. 30 31 Special Focus Educational attainment correlates with employment suggest the need for multifaceted policy interventions that and earnings outcomes.59 Education also influences the address not only educational needs but also broader social, sectors in which women are employed. Those with higher cultural, and economic barriers. Such an approach would education are less likely to work in traditionally lower- not only address the immediate disparities but also the paying fields such as agriculture and domestic services. underlying factors that perpetuate gender inequality. This However, despite the mitigating effects, education does nuanced understanding is essential for crafting policies that not seem to significantly alleviate the impact of early effectively promote gender equality and broader economic marriage, early childbirth, and social norms that remain on development in Kenya, providing a critical foundation for employment and earnings. This demonstrates that while informed and context-sensitive policymaking. education can somewhat buffer the negative impacts of early family formation and restrictive social norms, it is not 3.5 A multisectoral approach is needed for a solitary factor in improving women's economic status. lasting change Achieving lasting progress in women’s economic In sum, economic disparities affecting women in Kenya empowerment requires a comprehensive, multisectoral are complex, reflecting the connections between early approach that addresses the interrelated challenges family formation, restrictive social norms, and women's women face throughout their lives. The disparities economic outcomes. While education appears to mitigate highlighted in this analysis are rooted in a complex some negative impacts, it alone does not entirely bridge combination of socio-cultural, economic, and structural the gaps shaped by these factors. These correlations factors that demand coordinated interventions across Table 3: Enhancing girls’ and women’s economic empowerment framework: priority action areas across the lifecycle Childhood Adolescence Youth Adulthood (0-10) (11-19) (20-25) (26+) Priority 1: Improve access to and quality of education, especially in the most disadvantaged counties Increase access to Reduce dropout and absenteeism tertiary education, I. Building women’s Facilitate second chance particularly to human capital Improve female STEM engagement education and training STEM and more Leverage social protection and health profitable careers systems to strengthen human capital of girl children Address Priority 2: Reduce gender bias in teenage pregnancies II. Shaping social schools and early marriages norms and Promote a gender-responsive and gender- protecting women’s Enhance girls’ performance and aspirations transformative social protection system human capital Enhance parental aspirations for their and economic daughters participation Change expectations around domestic responsibilities: address disparities of time used for unpaid domestic and care work, starting in young years, and increase access to quality childcare options Improve early Improve agency, Improve women's entry and retention in the labor childhood confidence, self-efficacy market development and empowerment Priority 4: Improve access to better jobs and Priority 3: Facilitate entrepreneurship for women III. Improving access school-to-work Improve female participation in higher-value to better economic transitions industries opportunities and leadership Improve women access to leadership positions in firms Improve women access to political leadership Improve data availability in agriculture to boost policy response Priority 5: Prevent and respond to gender- based violence (GBV) through early interventions in schools and for adolescents out-of-school Reduce GBV prevalence IV. Ending gender- based violence Reduce female genital mutilation (FGM) Improve quality survivor-centered service prevalence provision for GBV survivors Reduce childhood exposure to violence through parent-child interventions 59 The analysis categorizes education into four categories – uneducated, primary, secondary and more than secondary. The uneducated category encompasses those women that have no completed levels of formal education, including pre-primary and incomplete primary education. 32 December 2024 | Edition No. 30 Special Focus multiple sectors and stages of life. To tackle these barriers raising educational and professional aspirations among effectively, a proposed framework for action focuses on participants and their parents. This indicates that such four critical pillars, each designed to address specific interventions can have enduring benefits beyond their obstacles while reinforcing one another to drive systemic immediate implementation, advocating for their broader change. While the framework outlines strategies adoption in similar contexts within Kenya. In Kenya, a variety spanning the lifecycle and the four pillars, a prioritization of bursary programs already exist, including the ”Wings exercise identified five key actions, informed by the most to Fly” program in the Ministry of Education; streamlining urgent challenges and Kenya’s current opportunities for and expanding these bursary programs, especially in the progress, to maximize impact and ensure transformative, lagging counties, would improve retention and graduation. sustainable outcomes. Similarly, the social protection and health systems could be leveraged to support vulnerable girls from birth through 3.5.1 Building women’s human capital adolescence to ensure adequate health, nutrition, and Priority 1: Keep girls in school and learning, especially in the economic resources to succeed in school. most disadvantaged counties Despite Kenya's significant progress in broadening Enhancing educational opportunities for girls, educational access, pronounced disparities continue particularly in underserved areas, lays a foundation for to disproportionately impact girls in disadvantaged comprehensive social and economic empowerment. counties, particularly in the northern regions. These areas However, while prioritizing immediate needs, the not only report the highest proportions of uneducated necessity of a well-rounded approach to educational women but also consistently show enrollment rates that enhancement is acknowledged. Attention is needed to lag the national average, exacerbated by deeper socio- reduce dropout and absenteeism, improve female STEM economic challenges. Furthermore, although the rate of engagement, enhance sanitary infrastructure to cater to girls' enrollment is increasing more rapidly than that of girls’ specific needs61 (for example by extending the reach boys at the national level, girls in these regions remain at of free sanitary products62), boost female teachers and a disadvantage. It is crucial to prioritize enhancing access, leadership in education at secondary level,63 particularly quality, and retention of education in these counties, in STEM subjects, to provide role models and foster a recognizing education's vital role as a safeguard against supportive learning environment for girls, among others. adverse economic outcomes and a foundation for future Education is a critical tool to empowering girls and empowerment. women, however as we have explored, it is only one piece of a bigger picture. Scholarship programs and cash or in-kind transfer schemes targeted to the most vulnerable girls in 3.5.2 Shaping social norms and protecting women’s disadvantaged counties can increase retention and human capital and economic participation graduation. This strategy not only reduces financial Priority 2: Reduce teenage pregnancies and early marriages barriers but also ensures that both girls and boys receive Prevailing societal expectations and entrenched gender the essential support needed to continue and complete roles lead Kenyan girls into marriage and motherhood their education. The World Bank Africa Gender Innovation much earlier than boys, adversely affecting their Lab (GIL) has highlighted the effectiveness of reducing educational and economic trajectories. To address the educational costs through cash transfers in various contexts, root causes of early marriage and teenage pregnancies, including a scholarship project in Niger.60 Under the Sahel comprehensive strategies are necessary to shift parental Women Empowerment and Demographic Dividend and girls’ aspirations for themselves, keep girls in school, (SWEDD) project, scholarships and tutoring provided to foster healthy relationships, prevent and respond to adolescent girls significantly delayed marriage and boosted gender-based violence, and equip boys and girls with the educational outcomes, enhancing life satisfaction and knowledge and resources to avoid unwanted pregnancies. 60 World Bank (2023). GIL top policy lessons on empowering adolescent girls. 61 World Bank (2023). What works to narrow gender gaps and empower women in Sub-Saharan Africa? An Evidence-review of selected impact evaluation studies. 62 Benshaul-Tolonen et al. (2019). Pupil Absenteeism, Measurement, and Menstruation: Evidence from Western Kenya.” CDEP-CGEG Working Paper 74, Center for Development Economics and Policy, Columbia University. 63 Muralidharan, K., & Ketki, S., (2016). “Bridging Education Gender Gaps in Developing Countries: The Role of Female Teachers.” Journal of Human Resources 2016 (March), 51 (2) 269- 297. December 2024 | Edition No. 30 33 Special Focus The recommendation is for nationwide campaigns and 3.5.3 Improving access to better economic comprehensive sexual and reproductive health (SRH) opportunities and leadership education. Launching a widespread social and behavioral Priority 3: Facilitate school-to-work transitions change campaign focusing on contraception, healthy The transition from education to employment relationships, consent, and understanding the impacts represents a critical juncture for young women, who of teenage pregnancy would help. The campaign should often become 'Not in Education, Employment or Training involve peer education and be inclusive of both genders. (NEET)' at higher rates than their male counterparts and Age-appropriate messaging must be tailored to the begin family formation at a younger age. Addressing diverse cultural contexts. Gaining support of community, this pivotal transition phase is essential to increasing their traditional, and religious leaders to reinforce these opportunities for better and more employment. The NEET messages has worked in other contexts.64 Bolstering sexual rate is particularly alarming for females in north eastern and reproductive health education across the nation counties and household responsibilities are the main ensures young people are well-informed and capable of reason for inactivity. Building on the recommendations making empowered decisions about their health and under Priority 1 and Priority 2, the aspirations of young relationships. girls, and their families must be built from a young age, potentially through social and behavioral change Evidence shows that SRH education on its own is not approaches, role models, and safe space platforms. enough to reduce teen pregnancy; broader multi- These aspirations, combined with support for keeping sectoral engagement is needed to effectively reduce girls in school and avoiding early marriage, will promote teenage pregnancies and early marriages. As keeping girls an enabling environment for young women to plan and in school is a key protective factor against early pregnancy, embark on productive careers. social and behavioral change should build on efforts under Priority 1 to emphasize on the benefits of completing one’s The recommendation is to invest in career preparation education (building on efforts under Priority 1), promoting including better information and labor intermediation safe school environments for girls, and building life skills for women to entry to more profitable occupations as for both boys and girls through community- or school- well as active labor market programs (ALMPs)66 tailored based safe space platforms. Safe Spaces are an intervention specifically to women’s needs. ALMPs programs are model, usually targeting adolescent girls that have been essential in supporting women’s entry and advancement widely effective in Africa and Asia in improving knowledge, Enhancing women’s access skills and attitudes, particularly concerning reproductive to better income generating health, gender and human rights, financial capability and opportunities is crucial to economic empowerment.65 In addition, a more gender- improving their economic status responsive social protection system that embraces an empowerment approach could support young women through key life stages, such as school to work, even as they navigate marriage and childbirth. Expanding access to quality childcare and school-reentry for teen mothers would enhance the labor market prospects and participation of young women. These measures collectively aim to create a more supportive environment that enables young women to pursue education and economic opportunities without the constraints of traditional gender roles. Photo: ©Peter Kapuscinski/World Bank 64 https://www.sweddafrica.org/sites/default/files/2024-03/Guide%201_L%E2%80%99engagement%20des%20leaders%20religieux%20et%20traditionnels_EN.PDF 65 https://www.sweddafrica.org/sites/default/files/2024-04/Guide%204_Les%20espaces%20s%C3%BBrs_EN.pdf and https://econ.lse.ac.uk/staff/rburgess/wp/ELA.pdf 66 According to a systematic review by the World Bank and the International Labor Organization, which analyzed evaluations of 220 youth-focused ALMPs worldwide since 1990, such programs have shown to significantly improve employment and earnings prospects, particularly in low- and middle-income countries. World Bank & ILO (2024). Active labor market programs improve employment and earnings of young people. 34 December 2024 | Edition No. 30 Special Focus in the workforce, helping to overcome the specific barriers Priority 4. Improving access to better jobs and they face.66 The evidence is compelling that youth at entrepreneurship for women the greatest risk of labor market exclusion, including Despite improvements, women remain engaged in less young women, benefit the most from these initiatives. productive and lower paying jobs. They are also more Career preparation entails providing information on likely to be in unpaid labor. Too many drop out of the formal occupations and their returns, as well as technical and sector permanently after motherhood. Many women who life skills needed in the labor market. Strengthening and become entrepreneurs out of economic necessity do not expanding apprenticeship and internship opportunities, have the skills to build large and successful companies. particularly in sectors traditionally dominated by men, Their decision to start a business instead of seeking are essential to prepare young women for the workforce, wage work is influenced by important constraints such increasing employability and addressing skill mismatches.67 as differences in skills, capital, networks, time and family Comprehensive programs combining technical training, formation, occupational opportunities, and safety.73 If socio-emotional and behavioral skills, job placement, and women face greater constraints than men in pursuing small stipends (to alleviate cost of childcare), improve alternative job opportunities, this can lead to a relatively employment and earnings for young women, including higher share of women taking up self-employment, which disadvantaged youth68,69 and help firms hire more qualified can affect their opportunities. The gaps in economic candidates.70 This approach not only equips young women opportunities are a primary, and significant, driver of the with necessary skills but also aims to integrate them into gender gap in business performance.74 When pursuing sectors offering greater economic benefits. Successful entrepreneurship, women have less access to credit75 to interventions show the importance of embedding soft grow their businesses, less access to networks and hence skills training, peer support, and mentorship into career less access to markets,76 and consistently show lower preparation opportunities to ensure young women are productivity. Enhancing women’s access to better income ready to compete for jobs in a range of sectors, succeed in generating opportunities and increasing productivity of the workplace, and grow into leadership roles. For instance, their businesses is crucial to improving their economic the Liberia's Economic Empowerment of Adolescent status. For instance, the Kenya Youth and Opportunities Girls and Young Women (EPAG) program demonstrated Project (KYEOP), succeeded by the National Youth significant impacts, through a combination of technical Employment and Opportunities Towards Advancement and life skills training followed by supportive follow- (NYOTA), has effectively delivered training, work up, leading to a 50% increase in employment among experience, and labor market insights to targeted youth, participants.71 Sectoral information dissemination entails with women comprising 50 percent of the beneficiaries. actively providing young women with detailed and These programs not only facilitate immediate employment transparent information about earnings potential across opportunities but also contribute to long-term economic various sectors. In Kenya and the Republic of Congo, this empowerment by providing sustainable pathways into approach has worked to encourage young women to the labor market. pursue training in higher-paying fields, broadening their economic prospects.72 67 World Bank, UNESCO, & ILO. (2023). Building Better Formal TVET Systems: Principles and Practice in Low-and Middle-Income Countries. 68 2018. “Integrated Youth Employment Programs. A Stocktake of Evidence on What Works in Youth Employment programs”. World Bank, Washington, DC. 69 Hicks et al., 2011; Jensen, 2012. 70 Maibom, Jonas, Michael Rosholm, and Michael Svarer. 2017. “Experimental Evidence on the Effects of Early Meetings and Activation.” Scandinavian Journal of Economics 119, no. 3 (May): 541–570. 71 World Bank (2020). GIL top policy lessons on increasing women’s youth employment. 72 https://documents1.worldbank.org/curated/en/352141647327119360/pdf/Addressing-Gender-Based-Occupational-Segregation-Experimental-Evidence-from-the-Republic-of- Congo.pdf and https://openknowledge.worldbank.org/entities/publication/095439c6-0191-5199-a935-612f74e78442 73 Chakravarty, Shubha, Smita Das, and Julia Vaillant. (2017). “Gender and youth employment in Sub-Saharan Africa: a review of constraints and effective interventions.” World Bank Policy Research Working Paper (8245). 74 Profiting from Parity. Unlocking the Potential of Women’s Businesses in Africa. 75 Female entrepreneurs in Africa have systematically lower levels of business capital – including equipment, inventory and property – relative to their male peers. Drawing on data from 14 impact-evaluation datasets from 10 countries in Africa, the typical male-owned firm has over six times the capital investment of female-owned enterprises. 76 Women often do not have the same access as men to large and diverse social networks that can support the growth and competitiveness of their business. December 2024 | Edition No. 30 35 Special Focus Evidence shows that entrepreneurship programs interventions and community engagement must be targeting youth can have significant positive impacts prioritized to combat the normalization of GBV from on long-term labor market outcomes, particularly a young age for both boys and girls, utilizing schools to when business skills training is combined with financial promote gender equality and prevent violence. Strategies support and mentorship.77 For example, KYEOP provided that build broad community support by engaging parents, business development support and grants to over communities, and religious leaders, complemented by 86,000 young entrepreneurs, allowing them to launch integration of gender discussions into school curricula and their businesses, creating 125,000 jobs, and increasing expanding outreach to adolescents outside the educational incomes by 50 percent.  Specific evidence on interventions system have shown the most promise in tackling this designed to support women-led businesses suggest pernicious and pervasive risk to women and girls. that tailoring to address their differential constraints and helping them in making decisions that foster business The recommendation is to implement educational growth is key. For example, a growing body of research interventions and bolster community engagement. indicates that business training programs can be more Educational interventions entail utilizing schools as effective for women-led businesses when they incorporate platforms for gender equality promotion and GBV elements that focus on socio-emotional skills -such as prevention, integrating group education that engages personal initiative and resilience- address women-specific men and boys in discussions about gender attitudes. constraints or provide networking opportunities. An approach using sport and play to engage students in school setups has been effective in Pakistan, where In addition, enhancing social protection, health services, it significantly reduced various types of violence; the and childcare is essential for establishing a robust method integrated gender discussions into the schools’ foundation of human capital throughout the lifecycle. learning activities, actively involving students and This would complement the activities to build and protect creating an environment conductive to breaking down human capital and facilitate school-to-work transitions gender stereotypes and fostering respect.78 Community and improving access to better jobs for women. Moreover, engagement, on the other hand, entails extending GBV fostering environments that enhance agency, confidence, awareness and prevention programs to adolescents and safety through life-skills training, safe space platforms, outside the school system, ensuring broad community and peer support is pivotal. For the most disadvantaged involvement and support. The Bandebereho program in women, more comprehensive labor readiness programs Rwanda, involving group sessions with expecting fathers may be needed to gradually build their social inclusion and their partners, is an exemplary model.79 Through and sustainable livelihoods. Recognizing the importance sessions aimed at promoting men’s engagement in of these broader factors ensures a holistic approach to School environments offer a addressing the complex landscape of women's economic pivotal platform for promoting empowerment. These elements are vital for long-term gender equality and initiating sustainable change and cannot be overlooked in broader GBV prevention policy and development discussions. 3.5.4 Ending gender-based violence Priority 5. Prevent and respond to gender-based violence through early interventions in schools and for adolescents out-of-school A third of women in Kenya have ever experienced physical violence, with most perpetrators being their current or former intimate partner. Evidence suggests the younger cohort of Kenyans show more restrictive attitudes, Photo: ©Dominic Chavez/World Bank with a larger share justifying wife beating. Early educational 77 Cho and Honorati, 2014; Kluve et al., 2016; Anam, 2018; Blattman and Ralston, 2015; Jayachandran, 2020. McKenzie, 2020. 78 Karmaliani, R., et al. (2020). Right To Play’s intervention to reduce peer violence among children in public schools in Pakistan: a cluster-randomized controlled trial. Global health action, 13(1), 1836604 79 Doyle, K., et al. (2018). Gender-transformative Bandebereho couples’ intervention to promote male engagement in reproductive and maternal health and violence prevention in Rwanda: Findings from a randomized controlled trial. PloS one, 13(4), e0192756. 36 December 2024 | Edition No. 30 Special Focus reproductive and maternal health, and caregiving, While targeted actions form the core of the proposed it achieved a reduction in physical and sexual intimate strategy, addressing GBV comprehensively also involves partner violence and increasing men's participation in broader societal measures. These include expanding childcare and domestic tasks, illustrating the effectiveness prevention efforts beyond schools to encompass of community programs in altering attitudes and behaviors community-wide GBV awareness programs, strengthening regarding gender and violence. judicial processes to hold perpetrators accountable while keeping survivors safe, reducing the prevalence School environments offer a pivotal platform for of female genital mutilation (FGM) in high-risk areas, promoting gender equality and initiating GBV and enhancing the quality-of-service provision for GBV prevention and awareness programs, educating survivors at the community level. Such measures ensure a students to recognize and mitigate risk behaviors holistic approach that complements the proposed focused associated with violence and abuse. Stereotypical views priorities, providing necessary broader societal changes to on gender roles have been identified as factors that not effectively combat GBV. only impede gender equality but can also perpetuate violent behaviors. A systematic review conducted in 2023 A comprehensive, multisectoral approach that addresses examined GBV prevention and intervention programs the interrelated challenges women and girls face throughout their lives requires timely and high-quality sex- within early education settings, revealing a notable lack and-gender-disaggregated data. of targeted interventions at these critical stages.80 One contributing factor to this deficiency is the reluctance or Sex-and-gender-disaggregated data refers to the inability of educators and school staff to acknowledge collection, analysis, and presentation of data that differentiates individuals based on their sex (biological certain behaviors as manifestations of gender-based characteristics) and gender (socially and culturally violence. The review highlighted that successful defined roles, behaviors, and identities). The purpose interventions share several key characteristics that are of using this data is to gain insights into the distinct instrumental in breaking down gender stereotypes and experiences, needs, and challenges faced by various fostering a culture of respect and equality within school groups within society, with a primary focus on identifying communities. Effective programs are characterized by their and addressing gender-based inequalities. In the context integration into the school's curriculum, actively engaging of Kenya, such data would also include information on students through participatory learning experiences. vulnerable populations such as the poor, women in ASALs They foster open dialogue within a secure and supportive (Arid and Semi-Arid Lands), and refugees. Such data is vital environment, emphasizing the importance of involving for developing effective policies and programs, as well as family members and the broader community in the for monitoring and evaluating progress toward women's conversation. Furthermore, these programs are grounded economic empowerment. Ongoing government efforts in empirical evidence, ensuring that interventions are both to enhance the coverage, accuracy, reliability, and relevant and adaptable to the specific needs and contexts comparability of this data will provide a strong analytical of the target audience. foundation for informed policymaking. 80 Villardón-Gallego L. et al. (2023). Early Educational Interventions to Prevent Gender-Based Violence: A Systematic Review. Healthcare (Basel). 2023 Jan 3;11(1):142. December 2024 | Edition No. 30 37 REFERENCES Adera, A., & Abdisa, L. T. 2023. Financial inclusion and women’s economic empowerment: Evidence from Ethiopia. Cogent Economics & Finance, 11(2), 2244864. 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Swedish International Development Cooperation Agency (SIDA), Stockholm. Karmaliani, R., et al. 2020. Right To Play’s intervention to reduce peer violence among children in public schools in Pakistan: A cluster-randomized controlled trial. Global Health Action, 13(1), 1836604. Kelkar, G. 2020. Gender and productive assets: Implications for women’s economic security and productivity. In Women, Land and Power in Asia (pp. 60-83). Routledge India. Mishra, K., & Sam, A. G. 2016. Does women's land ownership promote their empowerment? Empirical evidence from Nepal. Muralidharan, K., & Ketki, S. 2016. Bridging education gender gaps in developing countries: The role of female teachers. Journal of Human Resources, 51(2), 269-297. Naveed, A., Ahmad, N., Naz, A., & Zhuparova, A. 2023. Economic development through women’s economic rights: A panel data analysis. International Economics and Economic Policy, 20(2), 257-278. Samolenko, A., & Carter, K. 2015. 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GIL top policy lessons on empowering adolescent girls. World Bank. 2023. Building better formal TVET systems: Principles and practice in low-and middle-income countries. World Bank, UNESCO, & ILO. World Bank. 2020. GIL top policy lessons on increasing women’s youth employment. World Bank. World Bank. 2014. Voice and agency: Empowering women and girls for shared prosperity. World Bank. World Bank. 2012. World Development Report 2012: Gender Equality and Development. World Bank. 38 December 2024 | Edition No. 30 ANNEX TABLES Table A1: Selected economic indicators, 2019-2023 2020 2021 2022 2023 2024 2025 2026 Act. Act. Act. Act. Est. Proj. Proj. Output and prices (Annual percentage change, unless otherwise indicated) Real GDP -0.3 7.1 4.9 5.6 4.7  5.0  5.1  Agriculture 4.6 -0.4 -1.5 6.5 4.8  5.0  5.1  Industry 3.3 7.5 3.9 1.9 0.9  2.9  3.6  Services -1.8 7.5 6.6 6.2 6.0  5.7  5.4  Private consumption -1.5 6.4 3.3 6.2 5.6  5.4  5.4  Government consumption 3.1 6.0 8.1 3.5 2.0  1.5  1.9  Gross fixed capital investment 2.3 10.8 -0.8 1.9 2.1  5.5  7.1  Exports, goods and services -14.9 15.3 11.9 -4.5 5.5  9.8  10.1  Imports, good and services -9.4 22.2 4.6 -3.1 2.5  5.6  7.2  GDP deflator 4.9 4.3 7.0 6.1 6.0 5.8 5.4 CPI (period average) 5.3 6.1 7.7 7.7 5.1 5.0 5.0 Money and credit (Annual percentage change, unless otherwise indicated) Broad money (M3) 13.3 6.2 7.5 19.9 Credit to non-government sector 8.5 8.5 12.5 13.9 Policy rate (CBR) 7.0 7.0 8.8 12.5 NPLs (percent of total loans) 12.2 11.1 11.4 13.0 Central government (fiscal year i.e 2019 = 2019/20) (Percent of GDP, unless otherwise indicated) Total revenue & grants 17.3 17.6 16.7 16.9 17.2 17.9 18.3 Tax revenues 13.4 13.9 13.2 13.0 13.2 13.7 14.0 Non-tax revenues 3.4 3.4 3.3 3.7 3.7 3.9 4.0 Grants 0.5 0.2 0.2 0.1 0.3 0.3 0.3 Expenditure 24.9 23.8 22.6 22.4 21.5 21.7 21.7 Current 16.2 16.8 16.2 16.6 15.7 15.4 15.3 Capital 5.3 4.3 3.5 3.4 3.3 4.0 4.3 Primary balance -3.4 -1.6 -0.8 0.1 1.3 1.6 2.0 Overall balance including grants -7.5 -6.2 -5.6 -5.2 -4.3 -3.8 -3.4 Financing 7.5 5.9 5.4 5.1 4.3 3.8 3.4 Net domestic borrowing 4.4 4.8 3.2 3.7 2 1.1 0.8 Foreign financing 3.1 1.1 2.2 1.4 2.3 2.7 2.6 Public debt stock (fiscal year i.e 2019 = 2019/20) (Percent of GDP, unless otherwise indicated) Public gross nominal debt 68.4 68.0 72.0 65.7 62.8 60.5 58.2 External debt 35.5 33.9 38.2 32.1 30.5 28.6 26.7 Domestic debt 32.8 34.1 33.9 33.6 32.3 31.9 31.5 Memo: GDP at current market prices (KES billion) 10,715 12,028 13,490 15,109 16,774 18,632 20,645 Source: World Bank, National Treasury, Central Bank of Kenya, Kenya National Bureau of Statistics 40 December 2024 | Edition No. 30 Table A2: GDP growth rates for Kenya and EAC (2019-2023) 2018 2019 2020 2021 2022 2023 Kenya 5.6 5.1 -0.3 7.1 4.9 5.6 Uganda 6.3 6.4 3.0 3.4 4.7 5.3 Tanzania 5.5 5.8 2.0 4.3 4.6 5.1 Rwanda 8.5 9.4 -3.4 10.6 7.8 8.6 Burundi 1.6 1.8 0.3 3.1 1.8 2.7 Congo (DR) 5.8 4.4 1.7 6.2 8.9 8.4 South Sudan -3.5 3.2 -6.5 -5.1 -2.3 -1.3 Source: World Bank staff calculations Table A3: Kenya annual GDP (2010-2023) GDP, GDP, 2016 GDP/capita, GDP Years current prices constant prices current prices growth KSh Millions KSh Millions US$ Percent 2010 3,598,000 5,794,000 930 8.1 2011 4,163,000 6,090,000 1,010 5.1 2012 4,767,000 6,368,000 1,060 4.6 2013 5,311,000 6,610,000 1,130 3.8 2014 6,004,000 6,942,000 1,260 5.0 2015 6,884,318 7,287,024 1,330 5.0 2016 7,594,064 7,594,064 1,500 4.2 2017 8,483,396 7,883,816 1,550 3.8 2018 9,340,307 8,330,891 1,730 5.6 2019 10,237,727 8,756,946 1,890 5.1 2020 10,715,070 8,733,060 1,900 (0.3) 2021 12,027,662 9,395,942 2,080 7.6 2022 13,368,340 9,852,583 2,170 4.9 2023 15,108,806 10,399,980 2,110 5.6 Source: Kenya National Bureau of Statistics and World Development Indicators December 2024 | Edition No. 30 41 42 Table A4: Contribution by sub-sectors (percentage points) Industry by sub sector contribution Services by subsector contribution Year Quarterly Agriculture Industries Accommo- Information Other Services Mining and Electricity and Transport and Financial and Manufacturing Construction dation and Real estate and communi- Education quarrying water supply storage insurance restaurant cation Q1 0.98 -0.01 0.24 0.08 0.32 0.6 0.37 0.16 0.68 0.24 0.52 0.39 1.30 3.67 Q2 0.69 0.07 0.38 0.04 0.38 0.9 0.49 0.12 0.87 0.18 0.67 0.51 1.34 4.18 December 2024 | Edition No. 30 2019 Q3 0.16 0.05 0.24 0.04 0.43 0.8 0.46 0.12 0.49 0.20 0.81 0.47 1.36 3.92 Q4 0.22 0.06 0.08 0.02 0.39 0.5 0.44 0.21 0.53 0.18 0.44 0.47 1.33 3.61 Q1 0.97 0.07 0.15 0.04 0.54 0.8 0.43 -0.13 0.19 0.24 0.47 0.25 0.79 2.24 Q2 1.68 0.04 -0.43 -0.11 0.36 -0.1 -0.30 -0.64 -1.73 0.14 0.26 0.26 -1.76 -3.77 2020 Q3 -0.76 0.05 -0.17 0.02 0.57 0.5 -0.43 -0.70 -1.10 0.14 0.25 0.48 -1.23 -2.58 Q4 1.51 0.06 0.36 0.12 0.70 1.2 0.16 -0.74 -0.66 0.18 0.84 0.60 -0.48 -0.10 Q1 -0.13 0.11 0.17 0.09 0.35 0.7 0.73 -0.28 -0.79 0.15 0.75 0.39 0.78 1.72 Q2 -0.43 0.11 0.92 0.18 0.41 1.6 0.80 0.31 1.63 0.34 1.04 0.52 3.19 7.83 2021 Q3 -0.11 0.16 0.91 0.19 0.43 1.7 0.56 0.59 1.43 0.05 0.91 0.34 2.99 6.88 Q4 0.37 0.35 0.56 0.10 0.41 1.4 0.59 0.68 0.66 0.23 1.08 0.23 2.35 5.83 Q1 -0.18 0.20 0.31 0.08 0.35 0.9 0.39 0.25 0.60 0.25 1.30 0.37 1.32 4.48 Q2 -0.44 0.17 0.30 0.14 0.25 0.9 0.29 0.27 0.61 0.30 1.24 0.27 1.08 4.05 2022 Q3 -0.16 0.17 0.16 0.17 0.22 0.7 0.27 0.15 0.55 0.34 0.76 0.26 1.11 3.44 Q4 -0.27 -0.12 0.13 0.15 0.14 0.3 0.23 0.25 0.45 0.24 0.83 0.34 1.16 3.49 Q1 1.19 -0.13 0.17 0.09 0.17 0.3 0.26 0.42 0.59 0.30 0.52 0.43 1.24 3.75 Q2 1.50 -0.10 0.13 0.07 0.15 0.3 0.16 0.39 0.44 0.23 1.17 0.20 1.28 3.87 2023 Q3 0.74 0.01 0.23 0.09 0.25 0.6 0.25 0.35 0.53 0.29 1.40 0.28 1.52 4.63 Q4 0.95 -0.07 0.15 0.03 0.13 0.2 0.24 0.24 0.79 0.37 0.62 0.21 1.35 3.82 Q1 1.14 -0.15 0.10 0.06 0.01 0.0 0.42 0.35 0.36 0.25 0.61 0.33 1.28 3.60 2024 Q2 0.94 -0.03 0.26 0.02 -0.16 0.1 0.33 0.33 0.34 0.22 0.48 0.31 1.09 3.11 Source: World Bank, based on data from Kenya National Bureau of Statistics Note: Other = Wholesale and retail trade + Public admistration + Proffessional, admistration and support services + Education + Health + Other services + FISIM Table A5: National fiscal position Actual (percent of GDP) 2019/20 2020/21 2021/22 2022/23 2023/24* Revenue and grants 17.2 17.3 17.6 16.7 16.9 Total revenue 16.9 16.8 17.3 16.6 16.8 Tax revenue 13.1 13.4 13.9 13.2 13.0 Income tax 6.7 6.1 6.9 6.6 6.5 VAT 3.6 4.3 4.1 3.9 4.0 Import duty 0.9 0.9 0.9 0.9 0.8 Excise duty 1.8 2.1 2.0 1.9 1.7 Other revenues 1.8 1.1 1.2 1.1 1.2 Railway levy Appropriation in aid 2.1 2.3 2.2 2.2 2.6 Grants 0.2 0.5 0.2 0.2 0.1 Expenditure and net lending 24.8 24.9 23.8 22.6 22.4 Recurrent 16.0 16.2 16.8 16.2 16.6 Wages and salaries 4.2 4.3 4.1 3.8 3.6 Interest payments 4.1 4.1 4.6 4.8 5.3 Other recurrent 7.7 7.8 8.1 7.6 7.7 Development and net lending 5.7 5.3 4.3 3.5 3.4 County allocation 3.1 3.3 2.8 2.9 2.4 Parliamentary service 0.3 0.3 0.3 0.3 0.2 Judicial service 0.1 0.0 0.1 0.1 0.1 Equalization of funds 0.0 0.0 0.0 0.0 0.1 Fiscal balance Deficit including grants (cash basis) -7.5 -7.5 -6.2 -5.6 -5.2 Financing 7.4 7.5 5.9 5.4 5.1 Foreign financing 3.2 3.1 1.1 2.2 1.4 Domestic financing 4.2 4.4 4.8 3.2 3.7 Total public debt (gross) 63.0 68.4 68.0 72.0 65.7 External debt 33.1 35.5 33.9 38.2 32.1 Domestic debt 29.9 32.8 34.1 33.9 33.6 Memo: GDP (Fiscal year current market prices, Ksh bn) 10,621 11,256 12,698 14,274 16,106 Source: National Treasury, Quarterly Economic and Budgetary Review (Q1, 2024/25) and Budget Outlook Paper Note: *Indicate Preliminary results December 2024 | Edition No. 30 43 Table A6: Balance of payment (US$ million) 2022 2023 2024 Q1   Q2   Q3   Q4   Q1   Q2   Q3   Q4   Q1   Q2   A. Current account balance  -1,225  -1,771  -1,774  -1,005  877 -1,162 -970 -1,285 -857 -795 Trade balance  -2,450  -2,901  -2,804  -2,396  -2,447 -2,587 -2,271 -2,706 -2,273 -2,607 Exports  3,456  3,553  3,533  3,315  3,441  3,322  3,099  2,820  3,322  3,640  o/w Travel receipts  232   277   302   296   274   258   186   161   173   258   Imports  5,907  6,453  6,336  5,710  5,567 5,708 5,246 5,540 5,414 5,914 o/w Oil  1,137   1,568   1,634   1,210   1,150   1,207   1,110   1,302   1,147   1,215   Income  1,624  1,595  1,572  1,772  1,249 1,224 1,176 1,435 1,235 1,479 o/w Remittances  1024  1028  957  1045  1,020   1,024   1,081   1,076   1,070   1,203   B. Capital account balance  65  42  5  30  55  36  24  13  57  62  C. Financial account balance  -727  -1,717  -1,594  -344  656  -2400 25  -911  -834  -1526  Direct investment, net  28 -115 -135 -117 -63  -58  -55  -53  -123  -15  Portfolio investment, net  209 220 91 191 432  17  113  111  44  571  Financial derivatives, net  1 7 5 -33 9  13  31  31  16  14  Other investment, net  -966 -1,829 -1,555 -385 278  -2,372 -64 -1,001 -772 -2,097 D. Net errors and omissions  -627  106  -772  396  470  -180  60  177  -247  -140  E. Overall balance  1,060  -94 946  235  1,008 -1,094 911  184  213  -653  F. Reserves and related items  -1,060 94 -946 -235 -1,008 1,094 -911  -184  -213  653  Change in reserve assets  -1,059 21  712  186  -1,008 1,075 -501  -194  477  653  IMF net inflows -1 -115  234  49  0  19  -410  10  -689  0  Memorandum items Gross reserves   12,590  12,581  11,337  11,343  10,901 13,166 13,852 14,156 15,966 16,438 Imports cover 4.9  4.9  4.4  4.3  3.9  4.4  4.0  4 4.2 4.6 Quarterly GDP at current prices   29,206  28,618  26,870  28,639  28,502  26,577  25,485 25,258 27,233 31,647 Source: Kenya National Bureau of Statistics (Economic Survey 2024) 44 December 2024 | Edition No. 30 Table A7: Inflation Year Month Overall Inflation Food Inflation Energy Inflation Core Inflation January 5.4 8.9 6.0 1.9 February 5.1 8.7 4.7 2.0 March 5.6 9.9 4.3 2.2 April 6.5 12.2 6.2 2.4 May 7.1 12.4 6.2 2.6 June 7.9 13.8 7.0 3.0 2022 July 8.3 15.3 6.3 3.1 August 8.5 15.3 6.6 3.4 September 9.2 15.5 8.8 3.6 October 9.6 15.8 9.4 4.0 November 9.5 15.4 8.9 4.3 December 9.1 13.8 9.6 4.3 January 9.0 12.8 10.2 4.7 February 9.2 13.3 10.3 4.8 March 9.2 13.4 10.1 4.7 April 7.9 10.1 9.7 4.8 May 8.0 10.2 9.9 4.3 June 7.9 10.3 9.4 4.1 2023 July 7.3 8.6 10.4 3.8 August 6.7 7.5 10.3 3.7 September 6.8 7.9 9.7 3.7 October 6.9 7.8 10.7 3.8 November 6.8 7.6 11.1 3.7 December 6.6 7.7 10.2 3.4 January 6.9 7.9 10.0 3.6 February 6.3 6.9 9.6 3.6 March 5.7 5.8 12.1 3.6 April 5.0 5.6 6.5 3.5 May 5.1 6.2 6.3 3.7 2024 June 4.6 5.6 5.4 3.7 July 4.3 5.6 4.0 3.6 August 4.4 5.3 4.8 3.7 September 3.6 5.1 1.6 3.6 October 2.7 4.3 -0.9 3.6 November 2.8 4.5 -0.5 3.6 Source: World Bank, based on data from Kenya National Bureau of Statistics Energy inflation is an average of housing, water, electricity, gas and other fuels and transport inflation December 2024 | Edition No. 30 45 46 Table A8: Credit to private sector growth (%) Total Private Building and Transport and Finance and Mining and Private house- Consumer Business Other Year Month sector annual Agriculture Manufacturing Trade Real estate construction communication insurance quarrying holds durables services activities growth rates January 8.8 1.3 9.7 9.6 2.9 20.7 3.5 0.5 24.9 4.3 14.6 8.4 46.8 February 9.1 3.0 7.6 8.9 7.9 24.1 3.6 0.7 -10.7 5.0 14.0 11.6 49.7 March 10.9 7.7 9.9 10.4 6.4 25.0 3.6 0.5 -4.9 7.5 15.6 14.7 60.5 April 11.5 6.4 12.0 10.7 8.2 28.9 5.8 0.8 28.3 6.7 16.1 12.2 53.6 December 2024 | Edition No. 30 May 11.9 11.6 15.5 9.1 9.0 26.5 5.3 0.8 47.9 7.5 15.1 11.3 57.5 June 12.3 12.5 15.2 11.6 13.9 22.2 6.5 0.5 28.5 6.1 14.7 15.2 57.2 2022 July 14.2 10.8 16.1 15.2 14.1 27.0 2.8 1.7 78.6 7.6 14.8 16.9 69.8 August 12.5 19.2 15.2 13.3 11.5 13.5 1.2 1.0 97.2 7.8 14.3 16.1 60.8 September 12.9 17.0 14.2 16.4 12.5 21.6 0.2 0.1 57.4 7.8 14.4 12.5 53.8 October 13.3 21.7 17.5 15.3 8.0 22.8 5.4 1.6 53.5 5.9 14.0 13.2 49.8 November 12.5 20.3 14.9 14.3 6.0 21.8 4.4 2.8 58.3 6.0 12.6 14.5 44.8 December 12.5 22.3 13.8 11.4 8.2 23.5 7.6 3.2 31.3 8.2 12.9 13.7 41.8 January 11.5 20.7 13.8 11.1 5.8 16.6 6.7 3.3 54.2 7.8 12.5 13.7 33.3 February 11.7 18.0 15.2 11.8 3.0 16.5 21.1 2.9 97.7 7.8 12.4 13.5 15.3 March 11.6 14.9 15.8 11.9 5.8 17.4 28.4 2.3 83.2 7.2 12.7 9.3 11.9 April 13.2 16.9 21.7 13.7 4.2 18.0 32.3 2.4 55.6 5.0 13.3 12.5 20.6 May 13.2 18.3 19.3 15.4 5.1 22.0 32.7 1.9 41.3 7.0 11.9 13.5 6.8 June 12.2 18.6 18.0 10.2 4.9 19.8 29.7 3.7 24.0 8.4 12.0 12.1 8.7 2023 July 10.3 19.0 14.7 7.4 1.9 16.4 35.4 3.0 16.7 7.0 12.9 10.7 0.5 August 12.6 14.9 19.6 9.4 2.7 24.9 38.7 3.7 23.7 7.8 12.7 8.1 10.8 September 12.2 15.3 22.0 7.1 7.9 18.5 40.8 7.6 20.7 7.0 10.5 11.7 -0.8 October 12.5 18.5 18.4 9.9 13.0 16.2 41.6 6.5 5.9 8.3 10.8 8.3 7.1 November 13.2 23.7 20.0 10.2 3.6 22.9 38.9 6.5 11.8 7.8 11.1 7.2 12.8 December 13.9 23.4 20.9 13.1 8.6 20.8 60.2 7.1 15.1 2.5 9.9 7.7 16.4 January 13.8 32.5 23.1 12.9 3.1 16.6 32.8 8.0 8.0 7.3 9.3 9.5 15.8 February 10.3 28.2 13.6 10.7 4.1 7.5 16.9 6.1 4.3 8.9 7.4 3.3 29.6 March 8.0 17.5 9.4 6.2 0.1 6.9 13.0 5.2 34.4 8.6 6.4 6.8 15.2 April 6.6 15.7 4.3 5.1 5.0 9.6 6.2 5.4 26.9 10.4 5.2 -0.4 10.4 2024 May 4.5 9.9 1.6 2.7 -4.1 4.4 -0.1 7.3 47.2 7.6 5.7 0.9 7.3 June 4.0 10.1 -0.6 3.1 -8.3 4.4 3.3 3.6 111.7 7.5 3.9 1.9 8.8 July 3.7 11.3 0.4 0.6 -7.9 7.3 1.0 3.6 106.8 7.6 2.7 2.1 5.6 August 1.3 7.2 -6.7 0.8 -13.0 -1.1 4.4 3.8 102.3 5.9 3.9 1.4 -2.8 Source: Central Bank of Kenya Table A9: Mobile payments Number of Number of Value of Year Month Number of agents customers transactions transactions (Millions) (Millions) (Billions) January 299,860 68.3 181.9 585.8 February 301,108 67.9 171.4 568.7 March 302,837 68.6 195.8 664.3 April 295,237 68.7 188.2 663.5 May 305,830 70.0 193.0 692.6 June 304,693 70.3 186.2 665.1 2022 July 309,856 71.6 194.8 722.5 August 310,450 70.1 184.8 677.4 September 308,799 71.7 189.7 674.5 October 311,957 73.2 196.9 646.5 November 315,240 73.2 190.5 639.8 December 317,983 73.1 207.0 708.1 January 319,079 74.4 198.3 589.3 February 323,613 74.0 184.8 578.1 March 321,149 73.7 204.8 645.8 April 329,968 76.0 195.0 615.3 May 334,726 77.3 205.9 670.4 June 328,543 77.0 197.4 643.8 2023 July 330,912 77.2 202.9 684.6 August 333,428 77.6 208.6 666.6 September 336,033 77.1 201.6 660.8 November 327,928 77.1 201.3 707.6 December 322,404 77.3 213.3 788.4 January 321,340 76.8 211.6 784.0 February 320,182 77.3 213.3 790.8 March 320,276 77.7 207.8 747.7 April 331,614 77.4 203.6 711.7 May 334,088 77.2 208.1 722.3 2024 June 334,046 77.9 201.1 676.0 July 340,889 78.6 204.2 705.9 August 348,065 78.6 214.3 705.9 September 367,551 79.4 196.5 670.5 Source: Central Bank of Kenya December 2024 | Edition No. 30 47 Table A10: Exchange rate Year Month USD UK Pound Euro January 113.4 153.6 128.4 February 113.7 153.7 128.8 March 114.3 151.0 126.2 April 115.4 150.1 125.5 May 116.3 145.1 123.0 June 117.3 144.8 124.1 2022 July 118.3 141.8 120.7 August 119.4 143.5 121.0 September 120.4 136.7 119.3 October 121.0 136.6 119.0 November 121.9 143.0 124.2 December 122.9 149.8 130.8 January 123.9 151.3 133.4 February 125.4 151.9 134.5 March 129.7 157.4 138.8 April 134.4 167.3 147.4 May 137.3 171.3 149.2 June 139.7 176.3 151.4 2023 July 141.4 182.1 156.3 August 143.9 182.9 157.1 September 146.8 182.3 156.9 October 149.4 181.9 157.8 November 152.0 188.6 164.2 December 154.1 195.0 168.0 January 159.7 202.9 174.3 February 151.8 191.7 163.8 March 137.4 174.6 149.3 April 131.5 164.7 141.1 May 131.7 166.5 142.4 2024 June 129.4 164.5 139.4 July 129.9 166.9 140.8 August 129.3 167.3 142.4 September 129.2 170.7 143.5 October 129.2 168.8 140.9 Source: Central Bank of Kenya 48 December 2024 | Edition No. 30 Table A11: Nairobi securities exchange (NSE 20 Share Index, Jan 1966=100, End - month) Year Month NSE 20 share index January 1,889 February 1,887 March 1,847 April 1,801 May 1,682 June 1,613 2022 July 1,701 August 1,751 September 1,718 October 1,678 November 1,638 December 1,676 January 1,657 February 1,647 March 1,622 April 1,579 May 1,546 June 1,575 2023 July 1,577 August 1,540 September 1,508 October 1,461 November 1,496 December 1,501 January 1,509 February 1,536 March 1,752 April 1,667 May 1,722 2024 June 1,657 July 1,670 August 1,678 September 1,776 October 1,906 Source: Central Bank of Kenya December 2024 | Edition No. 30 49 Table A12: Central bank rate and Treasury bills Year Month Central Bank Rate 91-Treasury Bill 182-Treasury Bill 364-Treasury Bill January 7.0 7.3 8.1 9.5 February 7.0 7.3 8.1 9.7 March 7.0 7.3 8.1 9.8 April 7.0 7.4 8.3 9.7 May 7.5 7.7 8.7 9.9 June 7.5 7.9 9.1 10.0 2022 July 7.5 8.2 9.3 10.0 August 7.5 8.6 9.4 9.9 September 8.3 8.9 9.6 9.9 October 8.3 9.1 9.7 9.9 November 8.8 9.2 9.7 10.2 December 8.8 9.4 9.8 10.3 January 8.8 9.4 9.9 10.4 February 8.8 9.6 10.1 10.6 March 9.5 9.8 10.3 10.8 April 9.5 10.0 10.5 10.9 May 9.5 10.5 10.8 11.3 June 10.5 11.5 11.5 11.7 2023 July 10.5 12.1 12.2 12.5 August 10.5 13.9 13.2 13.6 September 10.5 14.6 14.4 14.6 October 10.5 15.0 15.0 15.3 November 10.5 15.3 15.4 15.6 December 12.5 15.7 15.6 15.8 January 12.5 16.1 16.1 16.3 February 13.0 16.5 16.7 16.8 March 13.0 16.7 16.9 17.0 April 13.0 16.2 16.7 16.7 May 13.0 15.9 16.5 16.5 2024 June 13.0 16.0 16.7 16.7 July 13.0 16.0 16.8 16.9 August 12.8 15.9 16.8 16.9 September 12.8 15.8 16.6 16.8 October 12.5 14.6 15.3 15.6 Source: Central Bank of Kenya 50 December 2024 | Edition No. 30 Table A13: Interest rates Short-term Long-term Year Month Overall 91-Treasury Central Average Interest Interbank Bill Bank Rate deposit rate Savings weighted Rate Spread lending rate January 4.3 7.3 7.0 6.5 2.5 12.1 5.6 February 4.7 7.3 7.0 6.6 2.6 12.2 5.6 March 4.8 7.3 7.0 6.5 2.5 12.2 5.7 April 4.7 7.4 7.0 6.6 2.6 12.2 5.6 May 4.6 7.7 7.5 6.6 2.5 12.2 5.6 June 5.0 7.9 7.5 6.6 2.5 12.3 5.7 2022 July 5.5 8.2 7.5 6.7 2.9 12.3 5.6 August 5.4 8.6 7.5 6.9 3.5 12.4 5.5 September 4.4 8.9 8.3 6.8 3.4 12.4 5.6 October 5.1 9.1 8.3 7.0 3.5 12.4 5.4 November 4.5 9.2 8.8 7.1 3.5 12.6 5.5 December 5.3 9.4 8.8 7.2 3.6 12.7 5.5 January 5.9 9.4 8.8 7.5 3.6 12.8 5.3 February 6.4 9.6 8.8 7.5 3.6 13.1 5.5 March 7.1 9.8 9.5 7.6 3.5 13.1 5.5 April 8.5 10.0 9.5 7.7 3.6 13.1 5.4 May 9.4 10.5 9.5 7.7 3.5 13.2 5.5 June 9.5 11.5 10.5 7.8 3.9 13.3 5.5 2023 July 10.0 12.1 10.5 8.1 4.0 13.5 5.4 August 12.5 13.9 10.5 8.4 4.1 13.8 5.4 September 12.3 14.6 10.5 8.6 4.0 14.0 5.3 October 12.3 15.0 10.5 9.1 4.0 14.2 5.0 November 11.3 15.3 10.5 9.5 4.0 14.4 4.9 December 11.5 15.7 12.5 10.1 4.2 14.6 4.5 January 13.6 16.1 12.5 10.2 3.7 15.2 5.0 February 13.6 16.5 13.0 10.3 3.3 15.9 5.6 March 13.5 16.7 13.0 10.5 3.9 16.3 5.8 April 13.7 16.2 13.0 10.8 4.1 16.4 5.7 2024 May 13.6 15.9 13.0 11.1 4.4 16.6 5.5 June 13.1 16.0 13.0 11.5 5.1 16.9 5.4 July 13.2 16.0 13.0 11.3 4.6 16.8 5.6 August 13.0 15.9 12.8 11.1 4.6 16.8 5.7 September 12.7 15.8 12.8 Source: Central Bank of Kenya December 2024 | Edition No. 30 51 Table A14: Money aggregate (Growth rate y-o-y) Year Growth rates (yoy) Money supply, M1 Money supply, M2 Money supply, M3 January 4.5 4.6 4.7 February 5.6 4.7 4.4 March 4.6 4.9 4.7 April 8.6 6.3 6.9 May 7.8 5.8 6.8 June 7.2 5.2 7.4 2022 July 12.4 5.0 7.6 August 4.9 2.6 5.1 September 8.2 4.3 6.1 October 4.7 2.7 5.2 November 4.4 3.0 5.3 December 6.4 5.3 7.1 January 8.6 6.9 9.2 February 4.9 5.5 8.8 March 5.0 5.9 10.6 April 3.1 4.7 9.4 May 2.4 5.3 10.4 June 10.0 8.5 13.4 2023 July 5.8 8.4 14.3 August 10.1 9.8 17.5 September 5.3 9.7 19.5 October 5.4 10.1 20.4 November 5.8 10.4 21.1 December 3.7 9.3 21.2 January 5.1 9.1 21.6 February 9.3 9.0 18.3 March 5.7 7.8 11.5 April 2.0 6.3 11.1 2024 May 3.2 7.1 10.3 June -1.6 4.9 6.8 July -5.6 3.8 5.7 August -8.9 4.7 3.3 Source: Central Bank of Kenya and World Bank 52 December 2024 | Edition No. 30 Table A15: Coffee production and exports Exports value Year Month Production MT Price KSh/Kg Exports MT KSh Million January 5,990 762 3,239 2,634 February 6,271 730 4,618 3,546 March 6,646 571 4,067 3,416 April 1,846 519 5,749 4,468 May 491 424 5,903 4,877 June 304 627 4,945 3,818 2022 July 2,111 664 5,179 3,824 August 4,380 637 3,213 2,482 September 3,409 589 3,172 2,365 October 3,015 494 3,224 2,412 November 1,775 433 3,654 2,388 December 1,613 463 2,224 1,416 January 4,440 603 1,921 1,217 February 5,598 680 3,878 2,569 March 5,073 622 5,486 3,851 April 4,407 566 5,428 3,896 May 1,374 604 6,359 4,745 June ** ** 7,078 5,001 2023 July ** ** 6,175 4,192 August 154 656 4,652 3,264 September 340 685 2,967 2,024 October 1,419 595 1,705 1,269 November 1,677 560 1,695 1,358 December 3,039 589 1,478 1,226 January 4,553 684 2,686 2,112 February 4,824 775 2,745 2,134 March 5,070 665 4,291 3,350 April 6,879 654 5,371 3,927 2024 May 3,462 523 4,733 3,614 June 4,524 561 5,800 4,124 July 940 520 6,991 4,936 August 3,034 620 5,729 3,710 September 2,649 634 5,014 3,378 Source: Kenya National Bureau of Statistics December 2024 | Edition No. 30 53 Table A16: Tea production and exports Exports value Year Month Production MT Price KSh/Kg Exports MT KSh Million January 48,683 294 45,585 12,629 February 40,826 311 44,093 13,303 March 46,321 301 46,044 13,559 April 41,171 304 43,446 12,769 May 50,093 280 47,380 13,777 June 43,268 286 46,795 13,693 2022 July 33,854 280 45,584 13,465 August 35,895 286 42,940 12,604 September 38,196 284 48,312 14,168 October 50,466 298 41,077 12,253 November 49,220 304 51,641 16,035 December 55,323 294 47,848 14,892 January 54,919 289 44,556 13,520 February 32,730 291 44,329 13,511 March 30,489 311 50,831 16,191 April 49,491 321 37,025 12,180 May 57,886 300 48,229 16,176 June 48,128 292 45,318 15,446 2023 July 44,697 291 39,944 12,910 August 45,578 324 58,591 20,193 September 48,497 329 47,807 16,980 October 52,793 323 45,360 16,112 November 50,906 330 49,507 17,768 December 54,336 337 46,525 17,284 January 58,967 349 51,188 18,268 February 55,447 339 59,044 20,430 March 54,347 295 59,599 19,070 April 53,853 301 56,263 17,337 2024 May 54,529 287 51,575 15,610 June 46,242 277 42,895 11,752 July 40,826 287 54,306 15,519 August 38,629 292 50,821 14,713 September 51,936 14,396 Source: Kenya National Bureau of Statistics 54 December 2024 | Edition No. 30 Table A17: Local electricity generation by source Geo- Co- Year Month Hydro Thermal Wind Solar Total thermal generation January 320 311 206 156 32 - 1,026 February 244 305 224 123 30 0.05 926 March 243 410 170 202 35 0.01 1,061 April 229 441 126 179 31 0.04 1,006 May 284 521 80 153 33 0.03 1,071 June 265 494 83 181 28 0.02 1,051 2022 July 252 521 104 208 25 0.02 1,111 August 257 513 121 186 22 0.02 1,099 September 244 488 118 201 26 0.01 1,077 October 247 478 97 237 39 - 1,098 November 233 494 124 177 39 0.04 1,067 December 221 541 133 139 42 0.02 1,076 January 185 525 107 203 47 0.02 1,067 February 113 472 142 191 43 - 961 March 126 509 167 152 41 - 995 April 191 476 120 157 39 - 983 May 238 511 95 182 44 - 1,070 June 258 505 68 168 37 - 1,035 2023 July 279 495 108 198 38 0.04 1,119 August 259 523 90 187 41 0.02 1,099 September 247 512 130 141 39 0.03 1,070 October 205 510 141 183 43 0.01 1,082 November 288 495 68 160 36 - 1,046 December 274 498 70 86 44 - 971 January 255 507 91 136 38 - 1,026 February 262 447 75 156 40 - 979 March 291 443 79 199 40 - 1,052 April 362 422 93 83 37 0.01 998 2024 May 349 441 99 95 39 - 1,024 June 325 417 84 156 38 - 1,020 July 358 472 103 135 31 - 1,099 August 321 483 99 158 34 0 1,096 September 271 455 92 191 36 0 1,046 Source: Kenya National Bureau of Statistics December 2024 | Edition No. 30 55 Table A18: Soft drinks, sugar, galvanized sheets and cement production Soft drinks litres Galvanized sheets Year Month Sugar MT Cement MT (thousands) MT January 46,537 64,839 21,546 855,883 February 44,407 64,191 21,671 818,496 March 61,898 79,438 19,616 911,250 April 45,868 68,483 19,479 842,239 May 44,289 63,209 23,383 752,698 June 45,640 70,376 22,073 773,153 2022 July 35,855 70,278 20,895 804,401 August 38,842 46,460 17,064 745,559 September 50,841 61,477 21,833 829,930 October 50,393 76,533 19,951 824,474 November 52,363 67,990 20,589 821,768 December 62,536 63,279 17,686 774,124 January 52,601 81,648 17,350 785,773 February 47,725 67,486 22,457 724,164 March 56,068 49,761 22,373 820,772 April 40,193 31,971 21,404 745,106 May 36,189 31,495 23,555 786,702 June 41,736 34,072 21,100 794,700 2023 July 33,155 33,246 24,337 844,237 August 38,047 27,680 23,943 872,135 September 58,002 16,760 23,443 834,651 October 48,795 24,597 24,178 836,384 November 51,948 25,179 23,847 756,055 December 68,483 48,877 24,555 715,003 January 46,839 60,680 21,544 672,899 February 43,175 63,075 23,112 713,472 March 55,354 69,657 23,801 708,989 April 53,579 59,263 25,185 688,163 2024 May 59,820 56,271 21,653 660,026 June 40,152 75,500 22,527 692,240 July 40,728 83,849 21,939 733,331 August 64,534 73,386 24,975 780,613 September 59,535 73,818 21,805 728,501 Source: Kenya National Bureau of Statistics 56 December 2024 | Edition No. 30 Table A19: Tourism arrivals Year Month JKIA MIA TOTAL January 63,277 6,655 69,932 February 67,560 6,390 73,950 March 76,336 5,073 81,409 April 77,379 3,949 81,328 May 87,058 3,429 90,487 June 103,332 4,834 108,166 2022 July 118,347 6,580 124,927 August 103,163 7,892 111,055 September 100,682 6,240 106,922 October 105,318 8,663 113,981 November 96,533 11,321 107,854 December 113,630 15,086 128,716 January 112,927 15,845 128,772 February 107,998 15,062 123,060 March 104,799 13,939 118,738 April 92,492 7,571 100,063 May 101,105 5,760 106,865 June 133,509 8,081 141,590 2023 July 155,758 12,607 168,365 August 155,359 16,701 172,060 September 133,400 12,277 145,677 October 128,399 13,843 142,242 November 118,424 15,182 133,606 December 134,226 20,057 154,283 January 110,186 24,479 134,665 February 123,046 23,396 146,442 March 110,323 17,734 128,057 April 96,949 6,413 103,362 2024 May 111,925 5,714 117,639 June 140,617 9,305 149,922 July 153,961 15,761 169,722 August 155,291 19,822 175,113 September 129,625 15,371 144,996 Source: Kenya National Bureau of Statistics Note: JKIA (Jomo Kenyatta International Airport, MIA (Moi International Airport) December 2024 | Edition No. 30 57