If economy is growing, why are Kenyans getting poorer?

In the heart of Nairobi’s bustling streets, Lilian Kihara, a single mother of three and a university graduate, stands behind her small kiosk selling snacks and drinks.

Her fragile stall on Kirinyaga Road, once a lifeline, has seen fewer customers over the past year.

“People don’t have money to spend anymore,” she says, her voice tinged with frustration. “I used to make enough to support my family. Now, I’m barely getting by.”

Lilian is not alone. Across Kenya, millions of ordinary citizens share her struggle, feeling the weight of an economy that appears to grow on paper, but not in their pockets.

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While official figures show the economy has grown at a steady 4.6 per cent over the past four years, for many Kenyans, the reality is far harsher. Businesses are shutting down, unemployment kicking, and the cost of living continues to rise, leaving families struggling to make ends meet.

A parliamentary report titled Budget Options for Financial Year 2025/2026 and the Medium Term, released in February 2025, paints a grim picture of why many Kenyans are sinking into poverty despite the Kenya Kwanza administration’s claims of economic growth.

“The industrial sector has experienced a gradual decline in Gross Domestic Product [GDP], from 18.1 per cent in 2020 to 17.3 per cent in 2023. Its contribution is projected to decrease further to 16.7 per cent in 2024,” the report states, adding, “The increased reliance on the services sector raises concerns about the effectiveness of recent government interventions aimed at revitalising the agricultural and industrial sectors.”

The report argues that poor policies, excessive borrowing, failure to invest in agriculture, overreliance on the services sector, and inadequate government investment are forcing the economy to shrink, pushing Kenyans into low-quality, unskilled jobs or joblessness. It further explains that even with increased participation, skill mismatches may persist, where workers’ education and expertise do not align with job market demands.

The report—analysing government documents from the Central Bank, National Bureau of Statistics, and several ministries—critiques State policies and highlights why economic growth has not translated into prosperity for ordinary citizens.

While Kenya’s labour force participation has increased slightly over the years, from 73.2 per cent in 2014 to 73.7 per cent in 2023, this has not resulted in the creation of quality jobs. Kenya’s formal sector employs just 3.3 million people, while the rest of the workforce—16.7 million strong—is trapped in the informal sector, where jobs are unstable, underpaid, and lack benefits.

“A growing labour force can drive economic growth if matched with job creation and productivity improvements. However, this requires policies that foster job creation, fair labour practices, and sustainable development. Enhancing labour productivity involves improving education, skills, technology adoption, and infrastructure to boost output per worker and support economic growth,” the report asserts.

For Lilian and many others, this means working long hours, often seven days a week, with little reward.

“I don’t have any choice,” she says. “I have to keep going, even if it feels like I’m going nowhere. I have to provide for my children.”

Her story resonates with many. As inflation drives up the cost of essentials like food, fuel, and utilities, families are struggling to survive. Food inflation has risen sharply, from 4.3 per cent in October to 4.8 per cent by December 2024. Prices for staples like maize flour, sugar, and cooking oil have become unaffordable for many households, forcing them to cut back on essentials.

“While food prices continue to soar, the overall inflation rate remains relatively steady, offering a small sense of relief amidst these challenges, as fuel costs have remained low, helping to cushion the blow for many families,” the report notes.

For James Mwangi, a father of four in Kiambu, this means skipping meals to ensure his children have enough to eat.

“I used to buy food that would last a week; now it barely lasts a few days,” he says. “It’s hard to watch my children go to bed hungry.”

Despite these challenges, Mwangi is determined to find a way out. Like many Kenyans, he is willing to take on any work—from casual labour to selling produce by the roadside—just to survive. But even that has become harder.

The report warns that a rise in labour force participation does not necessarily mean better job opportunities; often, it means more people competing for the same low-paying, unstable jobs.

The report explains that Kenya’s dwindling government revenues have left essential services like healthcare and education underfunded. Hospitals are overcrowded, schools are stretched thin, and roads are deteriorating. The government has sought to offset this through external grants, but these are insufficient to meet the needs of an ever-growing population.

For many families, they have to turn to expensive private healthcare—or worse, going without treatment altogether.

“My child needed hospital care, but I couldn’t afford the fees,” says Mary Atieno. “I had to watch her suffer because I couldn’t pay.”

The report warns that economic growth will remain meaningless unless it benefits those who need it most. The government must prioritise policies that generate stable, well-paying jobs and invest in essential services to truly improve the lives of ordinary citizens.

With rising inflation, declining investment, and shrinking formal employment, the economic hardships facing Kenyans remain severe.