Over the last twenty years, poverty has declined in Kenya. The poverty rate has fallen from 52% of the population in 1997 to 36% of the population in 2015. However, in 2015 income inequality was still large with more than half of total wealth controlled by the 20% richest of the population. An assessment of inequality causes could help design and implement policies to eliminate it. In particular, policies with well-designed redistributive fiscal components could play a substantial role in reducing income inequality.

This project is part of the first phase of the Research Facility on Inequalities, coordinated by AFD and funded by the European Commission's Directorate-General for International Partnerships over the 2017-2020 period. The first phase of the Facility has led to the conduct of 22 research projects and the publication of around 100 research papers and policy briefs.

The proposed research program has two objectives: 

• Documentation of inequality and poverty trends in Kenya since independence and diagnosis of their main drivers;
• Assessment of the impact of fiscal policies on inequalities in Kenya.

First, the Kenyan National Household Budget Surveys will be used to analyse poverty and inequality trends over a long period of time. These datasets will also be used to assess which factors perpetuate inequalities in the country.

Then, the Commitment to Equity methodology (Lustig and Higgins, 2017) will be used to conduct an in-depth assessment of the impact of fiscal policies on inequalities and poverty. It would enable to analyse who mostly pays taxes and who benefits from transfers and public spending in the country and what fiscal policy instruments have the greatest impact on inequality reduction.

The research project will result in two research papers, as well as workshops and policy briefs to disseminate the results to policymakers.

You may find the research paper here:

• Fiscal incidence, inequality and poverty in Kenya: a CEQ assessment
• Inequality trends and diagnostics in Kenya 2020

You may find the policy briefs here:

• Inequality in Kenya : trends and policy responses
• Fiscal policies in Kenya : Effects on poverty and inequalities
  
   

Contact:

Hélène Ehrhart, Research Officer, AFD

Anda David, Research Officer, AFD

Professor Germano Mwabu, University of Nairobi