Pandemic Created New Class of Kenyan Poor, World Bank Says

(Bloomberg) -- An additional two million people in Kenya have been pushed into deprivation as the coronavirus pandemic increased poverty levels by four percentage points, according to the World Bank.

This year, the World Bank sees sub-Saharan Africa’s third-biggest economy contracting by 1% in a baseline scenario and by as much as 1.5% in more adverse circumstances due to the impact of the pandemic on incomes, according to its latest economic update on the nation.

“Kenya’s poor population was predominantly rural and less well educated pre-Covid-19. However, the shock of Covid-19 created a new group of ‘newly’ poor Kenyans with different demographic characteristics,” according to the report. “They tend to be urban with household heads who are younger and more educated.”

Kenya’s unemployment rate almost doubled to 10.4% in the second quarter, according to data from its statistics agency. The nation had 78,512 confirmed infections and 1,409 deaths as of Wednesday, according to data collected by John Hopkins University and Bloomberg News.

The poverty rate in Kenya had been on a downward trend over the past 15 years and targeted cash transfers totaling about 50 billion shillings ($455 million) will more than offset the increase of poverty caused by the pandemic, according to the study.

Economic output could rebound early in 2021 as major impacts of the pandemic fade. Expansion then is projected at 6.9% year-on-year, according to the report. A key factor in the recovery is education sector output normalizing and adding a projected 2.2 percentage points to real gross domestic product growth.

Education output, which contracted by almost 26% in the first half of this year after growing 5.1% a year earlier, constituted the largest drag on growth of any sub-sector in Kenya’s economy. It shaved 1.7 percentage points from the GDP during the period, compared with a contribution of 0.4 percentage points a year earlier.

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