Household welfare is highly correlated with income. Household incomes are however not easy to measure, because they are not always a true reflection of actual incomes, but household consumption expenditure is usually a reliable indicator. Individual expenditures have historically been shown to be correlated with income levels. Household surveys have therefore traditionally captured data on expenditures as a proxy for estimating incomes.
Household expenditure in Kenya averages Ksh3,440 per adult equivalent per month nationally. However, there are differences between urban and rural areas, counties and constituencies. Household expenditures per adult equivalent per month are Ksh2,270 in rural areas compared with Ksh6,010 in urban areas.
Figure 2.14: Mean household expenditure (in thousands) per adult equivalent in counties
On average, households in Nairobi County spend Ksh 7,200 per adult equivalent compared to Wajir county where on average, households spend Kshs1,300 as illustrated in figure 2.14. The counties that have mean household expenditures of Kshs2,100 and below per month per adult equivalent are also among the poorest in Kenya.
For purposes of analysing inequality, we divide the population into quintiles of 20 percent each representing the lowest to the highest spending households in Kenya.
Figure 2.15: Consumption expenditure share by quintiles and number of households nationally and by rural/urban
As indicated in figure 2.15, the monthly household consumption share of the fifth quintile is 3.6 times that of the first quintile. The disparities in expenditure are more pronounced in urban areas than in rural areas. The consumption expenditure share of the fifth quintile in urban areas (with expenditures of Ksh7,200 or more) is almost 10 times more than the consumption expenditure share of the same quintile in rural areas. The expenditure share in the fifth quintile in urban areas is 121 times more than the expenditure share of the first quintile (that spends Ksh1,440 or less). Consumption share in rural areas is more even.
Figure 2.16: Share of households monthly spending of Ksh1,440 or less in counties
Figure 2.17 : Share of households monthly spending of Ksh7,200 or more in counties
The counties that display significant differences in the share of households whose expenditure share is Ksh7,200 or above versus those whose expenditure is Ksh1,440 or less are Nairobi (690 times), Mombasa (75 times) and Kiambu (22 times).
Figure 2.18 : Share of individual monthly expenditure nationally and by rural/urban
When we look at the population in each quintile, there are also big disparities between rural and urban areas; 44.6 percent of the total rural population spends Ksh1,440 or less compared with only 2.6 percent of the urban population. By comparison, 34.1 percent of the urban population spends Ksh7,200 or above compared with only 1.5 percent in rural areas, indicating large income differentials between urban and rural areas. One third of Kenyans spend Ksh1.440 or less per month while only 12 percent spend Ksh7,200 and above (see figure 2.18)
Figure 2.19 : Proportion of individuals monthly spending of Ksh1,440 or less and proportion of individuals monthly spending of Ksh7,200 or above in counties
Inequalities in consumption expenditure are pronounced across counties (see figure 2.19). There are 12 counties where 50 percent of the population spends Ksh1,440 or less per month. These counties are also among Kenya’s poorest. The proportion of those spending Ksh1,440 or less in Turkana County is 129 times the proportion of those spending the same amount in Nairobi.
The four counties with the largest proportion of their populations spending Ksh7,200 and above are major towns i.e. Nairobi, Mombasa, Kiambu and Kisumu. The proportion of those spending Ksh7,200 and above in Nairobi County is 112 times the proportion of those spending the same amount in Wajir County, where out of a population of 522,830 people, only 2,242 people can afford to spend Ksh7200 and above.