Estimating the Size &
Characteristics of the Middle
Class in Kenya, 2009 - 2015
Thursday, 15th December 2016
08.00 – 10.30 Hours
Sarova Stanley Hotel, Nairobi.
Overview
•
•
•
•
Introduction
Methodology
Estimation of Size
Characteristics
– Gender, Sector, Industry, & Regional Analysis
• Elasticity of the MC
– Inflation, Taxation, Economic performance
• Conclusions
• Policy Recommendations
Introduction
• Ongoing discourse of the existence of the
middle class in Kenya
• Input to political processes
• Definition of the middle class
Methodology
• Use of data from KNBS
• Wage earners or business owners
• Between 1 and 2 standard deviations above
the mean
• Justification
ESTIMATION OF SIZE OF MIDDLE
CLASS AND
THE MAIN CHARACTERISTICS
Estimation of Size
• Wage employees
– Male: 1.36 Million – 1.57Million (15%)
– Female: 0.60 Million – 0.91 Million (52%)
– Average increase – 26.5%
Wage employment by sex (2009 – 2015)
30%
29%
70%
71%
68%
2009
2010
2011
32%
Male
37%
37%
37%
37%
63%
63%
63%
63%
2012
2013
2014
2015
Female
Distribution of wage employees across income groups, 2015
500,000
450,000
Wage employmnet (number)
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
0-9999
10000-14999
15000-19999
20000-24999
25000-29999
30000-49999
Monthly income groups (Ksh)
Male
Female
50000-99999
100000+
Trends of Formal and Informal employment in Kenya
14.0
12.56
No. of Employees (million)
12.0
10.0
8.68
8.0
6.0
4.0
2.60
2.03
2.0
0.0
2009
2010
2011
Formal
2012
Informal
2013
2014
2015
Estimation of the Middle Class
120,000
102,429
100,000
76,392
80,000
Ksh
67,380
60,000
50,356
49,656
40,000
31,932
20,000
0
2009
2010
Upper limit (+2 S.D)
2011
2012
Mean
2013
2014
Lower limit (+1 S.D)
2015
Number of individuals in the Middle Class
74,337
82,947
272,569
125,576
260,689
215,580
239,736
218,820
235,080
227,516
204,801
208,400
166,515
178,056
1,917,888
1,557,405
1,572,828
2009
2010
1,656,780
2011
Individuals below MC
2,026,265
2,130,994
1,735,419
2012
Individuals in MC
2013
2014
2015
Individuals above MC
Middle class employees as a share of total wage
earners
100%
12.0%
11.5%
10.5%
10.0%
90%
5.5%
10.5%
8.5%
3.5%
3.0%
11.0%
11.0%
86.0%
9.0%
10.0%
9.5%
79.5%
79.5%
80.5%
84.0%
85.5%
2010
2011
2012
2013
2014
80%
70%
60%
50%
40%
79.5%
30%
20%
10%
0%
2009
Individuals below MC
Individuals in MC
Individuals above MC
2015
Characteristics of Middle Class by Gender
190,798
81771
182,482
2012
71921
61440
2011
167,815
2010
143,361
2009
145,880
53417
124,639
80000
116,561
130000
49955
180000
62520
230000
78207
280000
2014
2015
30000
-20000
Male
Female
2013
Characteristics of Middle Class by Sector
226,103
159,977
158,492
161,643
175,288
159,817
153,612
15,299
18,593
2009
2010
35,381
33,107
2011
2012
Public
Private
54,663
56,062
57,472
2013
2014
2015
Characteristics of Middle Class by
Sector (Percentages)
100%
90%
80%
70%
60%
91%
82%
83%
18%
17%
2011
2012
89%
75%
76%
25%
24%
2013
2014
80%
50%
40%
30%
20%
10%
9%
0%
2009
11%
2010
Public
Private
20%
2015
Characteristics of Middle Class by Industry, 2012
0.0%
20.0%
40.0%
Financial and insurance activities
60.0%
80.0%
100.0%
28%
Activities of extraterritorial organizations and bodies
15%
Electricity, gas, steam and air conditioning supply
24%
Wholesale and retail trade; repair of motor vehicles and motorcycles
13%
Accommodation and food service activities
14%
Information and communication
12%
Construction
12%
Manufacturing
11%
Average
86.0%
Arts, entertainment and recreation
11%
7%
Real astate activities
10%
Education
10%
Transportation and storage
10%
Professional, scientific and technical activities
10%
Activities of households as employers; undifferentiated goods- and…
89.5%
Administrative and support service activities
11%
5%
Other service activities
7%
Public administration and defence; compulsory social security
6%
Mining and quarrying
7%
Human health and social work activities
5%
Agriculture, forestry and fishing
3%
Water supply; sewerage, waste management and remediation activities
Below middle class
3%
Middle class
Above middle class
Contribution of the middle class by respective industries, 2012
Middle class as a share of the total
Education
21.55%
Manufacturing
13.79%
Wholesale and Retail Trade; Repair Of Motor Vehicles And Motorcycles
12.67%
Financial And Insurance Activities
8.49%
Construction
7.54%
Information And Communication
5.38%
Public Administration And Defence; Compulsory Social Security
5.18%
Activities Of Households As Employers; Undifferentiated Goods- And Services- Producing…
5.08%
Accommodation And Food Service Activities
4.36%
Agriculture, Forestry And Fishing
3.58%
Transportation And Storage
3.50%
Professional, Scientific And Technical Activities
2.76%
Human Health And Social Work Activities
Electricity, Gas, Steam And Air Conditioning Supply
Other Service Activities
Mining And Quarrying
2.37%
1.72%
0.94%
0.43%
Arts, Entertainment And Recreation
0.19%
Real Estate Activities
0.17%
Water Supply; Sewerage, Waste Management And Remediation Activities
0.12%
Administrative And Support Service Activities
0.11%
Activities Of Extraterritorial Organizations And Bodies
0.07%
63%
Middle class in select towns (2012)
Total No. of
Employees falling
Total No. of
within the Middle
Formal Employees Class range of Ksh
57,308 - Ksh 77,922
per month
Share of
Employees falling
within the Middle
Class range of Ksh
57,308 - Ksh 77,922
per month
1
Nairobi
542,688
62,409
11.5%
2
Mombasa
215,736
22,652
10.5%
3
Kisumu
58,178
6,400
11.0%
4
Nakuru
55,220
5,798
10.5%
5
Thika
37,397
3,740
10.0%
6
Eldoret
42,919
3,863
9.0%
7
Kisii
12,935
1,746
13.5%
8
Nyeri
13,594
1,563
11.5%
9
Malindi
12,313
1,354
11.0%
10
Kakamega
8,932
1,250
14.0%
11
Machakos
7,300
1,059
14.5%
12
Embu
7,773
894
11.5%
Proportion of the middle class (MC) in select towns, 2012
0%
Machakos
20%
30%
40%
50%
60%
73.0%
70%
80%
90%
14.5%
100%
12.5%
Kakamega
74.5%
14.0%
11.5%
Kisii
75.0%
13.5%
11.5%
Nairobi
Select Towns
10%
77.0%
11.5%
11.5%
Thika
78.5%
Embu
78.5%
11.5%
10.0%
Malindi
79.0%
11.0%
10.0%
Mombasa
79.5%
10.5%
10.0%
Kisumu
80.5%
Nyeri
81.0%
11.5%
7.5%
Nakuru
82.0%
10.5%
7.5%
10.0%
11.5%
11.0%
Eldoret
86.0%
9.0%
Average
86.0%
11.0%
<MC
MC
MC>
8.5%
5.0%
3.0%
Middle class in select towns as a share of the national total
(2012)
Nairobi
30.5%
Mombasa
11.1%
Kisumu
3.1%
Nakuru
2.8%
Thika
1.8%
Eldoret
1.9%
Kisii
0.9%
Nyeri
0.8%
Malindi
0.7%
Kakamega
0.6%
Machakos
0.5%
Embu
0.4%
41.6%
Elasticity of Middle Class to
Economic Factors
Inflation, PAYE Contribution, GDP
Responsiveness of the middle class to inflation
Total wage payment for middle class
350
292
300
258
250
225
200
160
150
166
132
161
172
182
117
100
115
125
132
125
50
0
2009
2010
2011
Nominal, Ksh billion
2012
2013
2014
Real, Ksh billion
2015
Monthly income trends for middle class
(a) Nominal wages
(b) Real wages (constant = 2009)
120,000
120,000
102,429
100,000
100,000
76,392
80,000
80,000
66,026
60,000
50,356
49,656
Ksh
Ksh
67,380
60,000
40,000 31,932
40,000
20,000
20,000
0
0
2009
2010
Upper limit (+2 S.D)
2011
2012
Mean
2013
2014
2015
Lower limit (+1 S.D)
63,834
48,659
47,608
31,291
31,382
2009 2010 2011 2012 2013 2014 2015
Upper limit
Mean
Lower limit
Effect of inflation on the size of middle class, (2009-2015)
(a) Shares
(b) Numbers
12.00%
300,000
272,569
11.00%
10.00%
10.50% 250,000
260,180
8.50%
8.00%
200,000
166,515
7.00%
6.00%
150,000
137,130
4.00%
100,000
2.00%
50,000
0.00%
2009
2010
2011
2012
2013
Before adjsuting for inflation
After adjusting for inflation
2014
2015
0
2009
2010
2011
Before Adjusting for inflation
2012
2013
2014
2015
After adjusting for inflation
Total monthly PAYE contributed by the middle class employee,
(2009 – 2015)
25,000
24661.0
20,000
16850.1
Ksh
15,000 14146.4
10,262
10,000
8829.2
5,000
4,928
2009
2010
2011
2012
2013
2014
Upper limit middle class individual
Lower limit middle class individual
Average for middle class individuals
National average
2015
Total Annual PAYE by the Middle Class
80
25%
22%
70
20%
20%
22%
21%
20%
19%
60
50
15%
40
10%
30
20
5%
10
-
23
27
33
35
50
58
68
2009
2010
2011
2012
2013
2014
2015
Total middle class PAYE
Middle class PAYE as a share of the Total
Linear (Middle class PAYE as a share of the Total)
0%
PAYE contribution (%)
Total PAYE (Ksh billion)
22%
Middle individuals (numbers)
Responsiveness of GDP on the size of Middle class
300,000
y = 95597x - 112188
R² = 0.9678
250,000
200,000
150,000
100,000
50,000
0
2.50
2.70
2.90
3.10
3.30
3.50
Real GDP (Ksh trillion)
3.70
3.90
4.10
4.30
CONCLUSIONS & RECOMMENDATIONS
Thank You!
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