Growing economy fails to fill pockets and plates

From a bird’s eye view, Kenya’s economy appears to be thriving. But as the common Kenyan saying goes, kwa ground vitu ni different, with the disconnect between national growth and individual realities become striking. 

The thriving economy is seen in various indicators. These vary from Kenya’s economic growth is outpacing its peers to the size of the economy itself having grown to being the sixth largest in Africa from being ranked eight three years ago. It is also seen in the shilling holding steady against major foreign currencies, exchanging at about Sh129 against the US dollar for more than 16 months, drawing concerns from even the International Monetary Fund. 

Foreign exchange reserves recently surpassed $12 billion (Sh1.56 trillion) — the highest in independent Kenya. The Nairobi Securities Exchange (NSE) has been recognised as one of the best-performing emerging markets globally.

What can be termed as stellar economic performance is also seen in inflation being stable for more than two years, remaining within the government target range of 2.5 per cent to 7.5 per cent, ending the year at 4.5 per cent in December 2025. 

But despite the impressive indicators at the national level, the average Kenyan is grappling with high cost of living, increased tax burden and stagnant or reducing income. Thus, while inflation remains within the Central Bank’s acceptable range and its impact is seen in stable and even lower cost of essentials including food, Kenyans continue to struggle with stagnant incomes such that even when food commodities are cheaper, they are still out of reach. 

Many households have had to adopt coping mechanisms that range from seeking additional income streams and reducing their spending to borrowing from friends while shylocks and digital lending apps have become survival tools and for many, traps that have left many deep in exorbitantly priced loans. 

“Kenya’s economy has demonstrated remarkable resilience over the past three years, consistently growing at a pace that outperforms both the global and regional averages. This strength is rooted in deliberate policies and the benefits of a diversified economy. The economy has thus been able to withstand adverse impacts of domestic and external shocks,” said the National Treasury in the draft Budget Policy Statement (BPS) published last week.

The difference between the economic performance and reality on the ground is not lost on some senior government officials including Treasury CS John Mbadi, who has in the past termed it a mystery but also blamed it on failures past regimes

“This paradox of impressive GDP growth and economic hardship is not a mystery. It’s a reflection of past investment choices that did not sufficiently benefit the productive economy,” said Mbadi at a past forum 

His boss, President William Ruto has, however, noted that while the economy is still work in progress, the Kenya Kwanza regime has done a lot that is now evident in lower cost of food items such as maize flour, which terms as “changes you can feel” in everyday costs.

In his State of the Nation Address in November, the President dismissed his critics, noting different indicators as well as “world’s most respected economic assessors, and market sentiment, are affirming what we already know: that our economy is strengthening, our prospects are brightening, and confidence in Kenya is rising”.

A new poll by research firm Infotrak shows that 29 per cent of Kenyans expect the economy will be better in 2026. This is compared to 25 per cent who expect it to be more or less the same as it was in 2025 and 16 per cent who are pessimistic and say it will be worse than 2025.  But even as the optimists outnumber the pessimists in the poll, a massive 61 per cent of the respondents in the same survey expect to be bogged down at the household level by the soaring cost of living. Thus while they see the national economy improving, they do not expect a corresponding impact in their pockets, mirroring experience in 2025.

“A strong majority (61 per cent) expects both cost of living and school fees, and unemployment (59 per cent) to increase in 2026,” said Infotrak in the report. 

Essential costs

“There is a prevailing sense of economic dread regarding essential costs, though there is slightly more hope for the stability of the Kenya shilling with 35 per cent expecting it to remain the same.”

“This suggests that while citizens may see some macro-economic indicators stablising (like the currency), they do not expect those ‘wins’ to trickle down to their daily household expenses.”  The poll, released on Tuesday revealed the myriad issues that Kenyans are grappling with, many of them expected to persist into the new year. Unemployment (26 per cent) and high food prices (25 per cent) emerged as the primary pain points. Out of 1,000 respondents, 17 per cent reported school fees as a key challenge, while 14 per cent struggled with low wages.

The survey further shows that most households have adopted coping mechanisms to manage economic stress. The most common strategy was seeking additional income (39 per cent), followed by cutting non-essential spending (26 per cent). Borrowing money from friends and family was the next major recourse, cited by 22 per cent of respondents.

Fifteen per cent reported relying on loans, while a similar proportion depended on community resources such as foodbanks and shelters. 

Spending on food

Alarmingly, 11 per cent rely on food rations. While grim, the latter survey finding reflects findings in other reports that have shown that many households are reducing their spending on food as well as reducing food portions of available food as cost of food items get out of reach.

Among the drivers of the high cost of living, according to the Infotrak survey, are corruption (31 per cent), taxes (26 per cent) and government policies (16 per cent).

The Kenya National Bureau of Statistics on Wednesday said inflation for December stood at 4.5 per cent, unchanged from November. It has remained within Central Banks target range of between 2.5 per cent and 7.5 per cent for  30 consecutive months, stretching back to July 2023

According to Treasury, the stable inflation has been supported by “abundant supply of food attributed to favorable weather conditions coupled with government interventions, lower fuel inflation attributed to the stability of the exchange rate, lower international oil prices and the decline in non-core inflation due to the impact of previous monetary policy tightening”.

The low inflation could however be an illusion of an economy that is doing well and instead driven by people being unable to buy. Inflation measures the increase in cost of goods, with among the factors that could drive an increase being too much money chasing too few goods in the market.

 In Kenya’s current scenario, it could be a case of inflation remaining low due to suppressed demand and hence inflation remaining low because people cannot afford to buy and prices have stopped going up.

“On paper, these figures suggest a stable economic environment with relatively controlled price growth,” said the Institute of Economic Affairs (IEA) in a May 2025 analysis that notes a high performing economy had failed to reflect the realities among many Kenyans. 

“But for millions of Kenyans, this narrative does not align with their everyday experiences. Despite the seemingly low inflation rate, the perception remains that the cost of living is still high. Rent, school fees, electricity, transport and basic necessities continue to put immense pressure on household budgets. For many, a routine visit to the market, a daily commute or a trip to the clinic still feels like a financial strain painting a much grimmer picture than the numbers alone reveal.”

“The disconnect between official statistics and real-life experience is not a paradox. It’s an economic signal or a sign that overall inflation may no longer be telling the full story.”

IEA noted that even with lower cost of food items such as maize flour, the cost of other essentials remained the same or even crept up. Items such as electricity, transport and rent, the institute noted, often remain unchanged or continue to rise, taking up a larger share of household income. 

“The pressure from these costs is not evenly felt; low-income households, which already spend the bulk of their earnings on basic needs, are affected the most. As a result, the official inflation rate fails to capture this uneven economic burden where the poor feel the squeeze most intensely, even when national figures suggest that prices are under control,” said IEA. 

Other factors at play that explain Kenyans feel that life is expensive, according to the economic think tank, include stagnant income. 

“Even modest price increases, when not matched by income growth, force families to make difficult trade-offs such as cutting back on food, postponing the payment of school fees, or forgoing medical care,” said IEA. 

Economic hardship

“Therefore, despite the low overall inflation rate, the true strain lies in the widening gap between the cost of items and what families can actually afford. This deepens economic hardship and explains why life continues to feel expensive for many Kenyans.”

Kenya’s economy is expected to grow by 5.3 per cent in 2025 and 2026, below the 6.3 per cent outlined in government development plans but also ahead of many economies in the region as well as above the global average of 3.2 per cent. 

Official data shows that the economy grew 4.9 per cent in the first quarter of 2025, which improved in the second quarter to five per cent. It is projected to have posted an even stronger performance in the third and fourth quarters, boosted by increased credit to the private sector but also growth in sectors such as mining and construction that had registered contractions in 2024. 

The Kenya Human Rights Commission in a report published early December 20025 noted that while Kenya commands the largest national budget in the East African region, the country is still failing to deliver the essentials including access to food, health and education, guaranteed under the Constitution.