Kenyans earning over Sh100,000 revealed


Economy

Kenyans earning over Sh100,000 revealed


Those earning more than Sh100,000 accounted for 2.9 percent of the 2.92 million formal workers captured in the Kenya Revenue Authority (KRA) database. FILE PHOTO | NMG

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Summary

  • Kenya National Bureau of Statistics (KNBS) data released Tuesday show the top earners increased by 2,234 members compared to a rise of 3,178 a year earlier.
  • Those earning more than Sh100,000 accounted for 2.9 percent of the 2.92 million formal workers captured in the Kenya Revenue Authority (KRA) database.
  • The 2.9 percent share is not in line with luxury spending and accumulation of property, including purchase of homes and high-end cars that have been witnessed recently, analysts say.

The number of Kenyans earning more than Sh100,000 rose 2.71 percent last year to hit 84,907, reflecting Kenya’s growing inequality in the formal sector and tax avoidance by wealthy Kenyans in the informal sector.

Kenya National Bureau of Statistics (KNBS) data released Tuesday show the top earners increased by 2,234 members compared to a rise of 3,178 a year earlier.

Those earning more than Sh100,000 accounted for 2.9 percent of the 2.92 million formal workers captured in the Kenya Revenue Authority (KRA) database.

The 2.9 percent share is not in line with luxury spending and accumulation of property, including purchase of homes and high-end cars that have been witnessed recently, analysts say.

The KRA has consistently questioned data showing a measly 2.8 percent of workers are paid Sh100,000 and above, pointing to a larger share of high income earners whose lifestyles are not in tandem with the taxes they pay or their declared income.

The taxman says a sharp increase in imports of luxury items and multi-million-shilling investments in real estate have opened its eyes to a potentially massive tax leakage, which if tapped could yield billions of shillings in additional revenues to the Exchequer.

The KRA’s argument is supported by the fact that only a few Kenyans have officially registered as belonging to the high-income earners’ bracket despite the growth in conspicuous consumption in areas such as Nairobi.

The taxman reckons there are workers who earn extra cash from ventures such as real estate, dividends and royalties, but fail to declare the additional income.

The KRA has struggled to bring more people into the tax brackets and curb tax cheating and evasion in the quest to meet targets in an economy where government income has consistently failed to meet targets.

Nearly half or 45.98 percent of the 2.93 million formal workers captured in the KRA database earned below Sh30,000, underlining the problem of Kenya’s pay inequality.

The earnings inequality has partly been attributed to the previous centralised system of government, which guided sharing of resources since Independence.

The devolved system of government, which took off in 2013, raised hopes of addressing the economic imbalance, as analysts say there is a need to offer incentives to attract private investors to counties and spread wealth.

Modest economic activity in the past two years has entrenched the income inequality with fewer jobs and stagnant pay hurting the middle class most.

While Kenya’s economy expanded 5.8 percent last year from 4.8 percent in 2017, private sector activity — which translates to jobs and higher pay — has remained muted.

About 78,500 new formal jobs were created in the economy last year, unchanged from 2018 and down from 114,400 in 2017, according to the Economic Survey 2020 data.

This is the slowest pace of formal job growth since 2012 when the economy churned out 75,000, adding to the crisis of youth unemployment. The data does not capture job cuts and net employment.

The drop in new jobs combined with stagnant wages for majority of workers has raised queries over equitable distribution of the growth dividend among Kenyans considering the economic growth expansion witnessed recently.

Official data shows that private sector produced the bulk of those earning above Sh100,000 with men dominating the top pay scale.

About 64.5 percent of men or 54,681 of them earned more than Sh100,000 compared to 30,126 women in this club.

The highest-paying jobs are concentrated in the private sector, which had 73,099 or 86.2 percent of all the top earners.

The public sector, including parastatals, the national and county governments, employed 11,708 of those taking home the largest pay cheques.

The education sector accounted for the largest share of those earning above Sh100,000 at 30.9 percent or 17,879 individuals, representing lecturers, administrators and secondary school teachers among others.

RETAIL TRADE

Financial services were second and accounted for 11,598 or 15.33 percent of the top earners, followed by wholesale and retail trade and repair of motorcycles and motor vehicles whose number stood at 10,909 or 4.2 percent.

None of employees in activities such as mining and quarrying, and production of undifferentiated goods were earning above Sh100,000.

The actual labour earnings across the country remain unclear, with most Kenyans employed in the informal agricultural sector.

In total, however, the private sector has been doling out the biggest pay cheque in excess of Sh1 trillion last year or more than 70 percent of the total wage earnings.

This underlines the critical role of companies in creating and sustaining earnings from employment.



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Why Kenyans are no longer cheering their constitution


Many Kenyans were jubilant when the constitution was adopted a decade ago

In our series of letters from African journalists, Waihiga Mwaura looks at what has changed in Kenya 10 years after it adopted a new constitution intended to reform how the country was governed and reduce ethnic tensions.

There are many lessons from George Orwell’s famous book Animal Farm – the most poignant being that the animals who rebelled against their human farmer hoping to create an equal society ended up being disappointed by what came next.

With the bells of independence chiming across the continent around 10 years after that classic was written, there was great hope that newly achieved African self-rule would lead to the equitable distribution of resources.

Kenya's presidents until August 2010 - from right to left Jomo Kenyatta, Daniel arap Moi and Mwai Kibaki - had been all-powerful
Kenya’s presidents until August 2010 – from right to left Jomo Kenyatta, Daniel arap Moi and Mwai Kibaki – had been all-powerful

Several decades on that expectation was replaced by disillusion as local oppressors often took the place of the expelled colonial “masters”.

This is why Kenyans were so jubilant on 27 August 2010 when a new constitution was adopted.

In the words of former Chief Justice Willy Mutunga, the new laws marked the culmination of “almost five decades of struggles that sought to fundamentally transform the backward economic, social, political, and cultural developments in the country”.

Imperial-like powers

What changes did the 2010 constitution usher in?

A huge ceremony attended by regional presidents was put on to ratify the new constitution
A huge ceremony attended by regional presidents was put on to ratify the new constitution

Well, previously the president operated with imperial-like powers controlling the three arms of government.

He appointed and sacked judges.

He determined the calendar of parliament and could have as many ministers as he liked.

You get the picture.

Kenyans were clear in terms of what they wanted.

Quote box of David Maraga, Kenya's chief justice, saying:
Quote box of David Maraga, Kenya’s chief justice, saying: “In my view the constitution of Kenya is one of the best constitutions in the world, if only we could implement it”

They were keen to see clear a separation of powers between the legislature, the executive and the judiciary.

They wanted their rights more definitively enshrined in the constitution, they wanted gender equality and they wanted the devolution of resources – away from central government to the 47 counties that were created.

‘Too progressive’

So a decade on, it has been a time of reflection, looking back at the gains made – like more respect for human rights – but also at the missed opportunities.

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And – according to an Infotrak poll commissioned by several civil society organisations, including Amnesty International Kenya – the views are mixed.

Only 23% of Kenyans are satisfied with how it has been implemented and 77% are either dissatisfied or disinterested.

Quote box. Waihiga Mwaura:
Quote box. Waihiga Mwaura: “The much-vaunted land commission that was to review past abuses has had little impact as it has been dogged by leadership problems”

Kenya’s Chief Justice David Maraga recently said: “In my view the constitution of Kenya is one of the best constitutions in the world, if only we could implement it.”

Senior lawyer Ahmednasir Abdullahi believes the problem is that the constitution is just too progressive for the political elite, saying they have only rolled out what is convenient to them.

One of the most striking failures can be seen in the sea of male faces in parliament – the requirement that not more than two-thirds of MPs be of the same gender has clearly not been implemented.

Many Kenyans feel the constitution has done little to end corruption
Many Kenyans feel the constitution has done little to end corruption

The judiciary says its funding is not in line with what was promised in the constitution.

And the executive and judiciary have certainly not seen eye to eye since the Supreme Court annulled the August 2017 election over irregularities.

When the Supreme Court was due to hear another case seeking to delay the rerun in October 2017, not enough judges turned up – one was unable to come as her bodyguard had been shot by gunmen earlier in the week – meaning the vote, boycotted by the opposition, went ahead as planned.

Judges also accuse the executive of regularly flouting court orders.

Poorer counties are still poor while a bill is languishing in parliament that would give them access to a $240m (£182m) fund for development projects.

Elections in 2017 again saw clashes that polarised the nation
Elections in 2017 again saw clashes that polarised the nation

The much-vaunted land commission that was to review past abuses has had little impact as it has been dogged by leadership problems.

Corruption is still a major issue – with Kenyans currently focused on the alleged theft of millions of dollars meant for the purchase of medical supplies to combat the Covid-19 pandemic that has turned into a vicious political battle.

And there is a concern that the constitution did not satisfactorily ensure the independence of the police.

‘Building bridges’

So is there a way forward?

Some, including the leader of the opposition ODM party, Raila Odinga, who served as prime minister in the government of national unity that brought in the constitution after deadly post-poll violence, feel some of the laws need amending.

In the August 2010 referendum, 67% voted in favour of the new constitution
In the August 2010 referendum, 67% voted in favour of the new constitution

He has joined forces with President Uhuru Kenyatta to champion change under an initiative dubbed “Building Bridges”.

The two rivals kissed and made up – metaphorically – two years ago to end tensions following another disputed, deadly and divisive election season.

They agreed to put together a team to find a way to end such instability looking at nine issues – including ethnic antagonism, corruption and devolution – thought to be among the greatest challenges since the country became independent in 1963.

And this taskforce is expected to release its final report soon.

Yet the Infotrak poll shows that 60% of Kenyans are not keen on another constitutional review, wanting instead the constitution they voted for in a referendum in 2010 to be respected.

They would prefer their politicians to rule in accordance with the laws they have, agreeing with Russian writer Leo Tolstoy who once said: “Writing laws is easy, but governing is difficult.”

More Letters from Africa:

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A composite image showing the BBC Africa logo and a man reading on his smartphone.
A composite image showing the BBC Africa logo and a man reading on his smartphone.





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