Kenya: Reflection, Deep-Dive Analysis of WB's Report On Poorest Nations

Dar es Salaam — WITH an average daily income of less than 3 US dollar, Kenyans are among the world's poorest, according to the World Bank.

The nations studied in 'Our World in Data,' a publication by the World Bank, include those in sub-Saharan Africa, where extreme poverty is most pronounced.

Among African nations singled out by the World Bank and other multilateral financial organisations, the Congo ranks first at 85.3 per cent, followed by Mozambique at 82.2 per cent, Malawi at 75.4 per cent, Burundi at 75.2 per cent, Zambia at 71.7 per cent and Kenya at 46.4 per cent.

The Daily News reporter questions Hildebrand Shayo, an economist and investment banker, about the economic implications for African nations, such as Kenya, which ranks 10th on the World Bank's list of the poorest nations.

Kenya is a nation previously known for a strong economy in comparative terms, with the majority of its people living on less than 3 US dollar per day.

Question: Given that it has a disproportionate impact on African nations, how reliable is this report?

Response: Methodologically, the worldwide report on the poorest nations is solid. It is based on standardised surveys of household income and consumption, adjustments for purchasing power parity (PPP), and internationally agreed poverty thresholds, such as living below 3 US dollar per day.

International organisations like the World Bank and the International Monetary Fund rely on these techniques because they permit reliable comparisons across nations.

It is more likely that observable structural realities, such as low per capita incomes, strong reliance on low-productivity agriculture, limited industrialisation and rapid population growth, than any intentional bias in the data, explain why African countries appear disproportionately high in the rankings.

This aspect of income based poverty is adequately covered in the report As an economist, it is necessary to assess the report's reliability with important contextual constraints, though.

In many African civilisations, nonmonetary elements, including land access, informal economic activity, social networks and public services, are crucial to people's livelihoods, yet income based poverty lines oversimplify these issues.

Accuracy can be compromised by data gaps, outdated surveys in certain nations, and delays in collecting data after economic changes. This WB report, in my view, has done a good job of highlighting income poverty, but it is not meant to be a comprehensive assessment of progress or well-being.

When paired with country specific analyses that account for local economic and social circumstances and multidimensional poverty indices, its results become much more credible.

Question: Despite having many agreements and relationships with Western nations, why are most African countries, including Kenya, in this predicament right now?

Response: Kenya's ascent to the tenth position among countries with high proportions of people living below the poverty threshold is more indicative of domestic structural and governance deficiencies than of external financing alone, despite the country's substantial debts to Western banks and multilateral lenders.

The economy's capacity to generate inclusive development has been compromised by persistent fiscal factors, as reflected in Kenyans' own accounts, including mismanagement, inefficient use of borrowed funds, and limited investment in productive sectors.

The developmental impact of public spending has been undermined by leakages, while large portions of debt have been used to finance recurrent expenditure or prestige infrastructure with low short-term returns.

In the meantime, household and SME incomes have been eroded by the high cost of living, rapid population growth, and heavy taxation.

As an economist, I argue that the primary burden lies with national policy choices that failed to convert debt into broad-based economic transformation, despite external creditors' responsibility through lending models that prioritise repayment over social outcomes.

Question: Should Kenya maintain partnerships with nations that contributed to its economic downfall if doing so would not provide profits?

Response: Kenya should critically reassess rather than automatically maintaining partnerships with nations that have contributed to its economic difficulties if those relationships no longer deliver clear economic or strategic returns, having examined the economies of most East African nations and what is causing some to lag behind, such as Kenya ranking as the 10th poorest nation in the world.

Nations need to know one key and important fact. International partnerships are not charitable endeavours; they are transactional agreements intended to improve national welfare through investment, technology transfer, market access or fiscal stability.

The continuation of such partnerships becomes economically irrational and politically costly when they primarily entrench debt dependence, expose the economy to unjust trade terms, or constrain policy space without generating profits or developmental spill overs.

Nevertheless, in my view, for Kenya to be safe, disengagement should be strategic rather than emotive. Kenya must distinguish between isolating itself from global capital and markets and reforming unequal partnerships.

Renegotiation should be prioritised to achieve mutually beneficial, value-creating terms. Failure to do so may extend economic stagnation rather than promote recovery.

Question: Despite the massive amounts of money that the World Bank and other Western financial organisations are lending to Africa, why hasn't economic growth improved?

Response: The economic development of a significant portion of Africa has not improved significantly, despite substantial lending by the World Bank and other Western financial institutions.

Looking at the use of most loans, this is a fact that loan and concession providers would like to understand. This is because finance has been prioritised over transformation.

Rather than profoundly altering production systems, industrial capacity, or technological capabilities, loans have primarily supported macroeconomic stability, debt servicing and short-term fiscal deficits.

This lending model often perpetuates extractive economic structures, confining African countries to low-value positions in global supply chains by exporting raw materials and importing finished products.

The impact of borrowed funds is further undermined by weak governance, corruption and policy conditionality that constrain state-led industrial policy.

Consequently, debt accumulates faster than productive capacity, creating a cycle in which loans ensure financial survival but fail to deliver the inclusive, self-reinforcing development needed to raise incomes and reduce poverty.

Question: The WB's studies like these are being utilised to keep lending to these African countries despite the crisis, so what lessons should these nations take away from them?

Response: The World Bank's reports, which rank Kenya among the world's poorest nations, should be read as diagnostic tools and as indicators of a flawed development cycle that African countries must urgently disrupt.

Even when debt burdens are already unsustainable, and growth remains feeble, these studies are often used to justify continuing lending as the primary solution, despite accurately documenting income poverty.

The primary lesson for Kenya and comparable nations is that data without structural change serves as a justification for repetition, resulting in more loans, more reforms on paper, and limited real transformation.

By redirecting their attention to domestic resource mobilisation, productive investment, industrial policy and regional trade, these nations must learn to interpret these reports as warnings rather than invitations to further borrowing.

Without this pivot, poverty rankings risk becoming instruments that perpetuate financial dependence rather than tools that foster genuine economic self-reliance.

Question: When the World Bank and other Western financial institutions handed this report to Kenya and the other African nations included in it, what did they hope to achieve?

Response: The primary objective of the World Bank and other Western financial institutions in releasing and presenting this kind of report to Kenya and other African nations was to portray poverty as a calculable, policy-manageable issue that justifies ongoing engagement through technical assistance, financing and reforms.

In my view, the report's objective could be to attract concessional funding, guide resource allocation and influence policy decisions by emphasising areas of vulnerability.

Nevertheless, it also reinforces the current development architecture by linking diagnosis to conditional lending rather than to significant structural change.

Reflecting on economic lectures delivered by the former Vice-President of URT, Dr Philip Mpango, while lecturing at the UDSM, and I was pursuing my economics degree, I can certainly say that these institutions exert pressure on governments to adhere to predetermined policy frameworks, often centred on fiscal discipline, market liberalisation and social safety nets, by quantifying poverty and ranking countries.

However, they largely avoid challenging global trade imbalances and power asymmetries. In this regard, the report aims not only to inform but also to maintain an intervention model that keeps African economies engaged in a system where solutions are externally defined and finance-led, rather than domestically driven and production-cantered.

Question: Is there anything that Kenya and the other African nations should do?

Response: Indeed, the most pressing matter for Kenya and other African nations is to stop treating external diagnoses as development strategies.

Policy can be informed by reports, evaluations and prescriptions from global institutions; however, these cannot substitute for a sovereign, unambiguous economic vision grounded in domestic circumstances.

Despite contradicting conventional policy advice, African states must transition from poverty management to production engineering by strategically investing in value addition, regional trade, agricultural systems and industrial capability.

This also entails confronting internal failings, such as corruption, elite capture, weak institutions and short-term politics that sacrifice long-term transformation for immediate fiscal relief.

African countries risk remaining perpetually 'under assessment,' borrowing to address symptoms while the structural causes of poverty remain unaddressed, unless they regain control over the definition and implementation of growth.

Question: Following the report's release, what suggestions do you have for other African nations that were not named above, such as Kenya and others, to help them exit their debt and achieve independence?

Response: Following the release of the World Bank report, African nations, including Kenya and those not explicitly examined, should treat its findings as a final warning rather than a recurring headline.

Instead of debt-fuelled consumption and raw-material exports, the solution to the poorest rankings is to prioritise domestic production, regional value chains and export diversification to reduce structural dependence.

To expand productive capacity, safeguard policy space for industrialisation, and provide aggressive support to SMEs, agriculture and manufacturing, governments must rigorously align public borrowing with projects that deliver the highest employment multipliers.

Equally important is the restoration of credibility through equitable taxation and accountable governance, which shifts the burden from households to extractive sectors and rents.

Independence will not be achieved through improved rankings or more concessional loans; rather, it will be achieved through deliberate decisions that establish self-sustaining economies capable of financing growth internally and negotiating in the global market from a position of strength.

Question: What does the future hold for Kenya and Africa if current trends continue?

Response: The future of Kenya and much of Africa is at risk of a dangerous normalisation of low expectations if current trends persist.

This would turn poverty rankings into recurring milestones rather than catalysts for change. Kenya risks being caught in a cycle of sluggish growth, high debt servicing and persistent household vulnerability just above or below the poverty line, leading to more frequent and more severe economic shocks.

Even as headline GDP figures occasionally improve, the continuation of debt-led development, limited industrialisation and dependence on external markets will likely deepen inequality and erode fiscal sovereignty across Africa.

My final remark is that, in a rapidly changing global economy, the continent is compelled to remain reactive rather than transformative because of the underutilisation of its young and expanding population.

The genuine threat is not stagnation itself, but the loss of generational opportunity for young people.

Read the original article on Daily News.

Kenya: Reflection, Deep-Dive Analysis of WB's Report On Poorest Nations

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