Nairobians spend averagely Sh20k per month, analysis shows
Individuals and families in Nairobi have the highest spending power, an analysis by Nation Newsplex and the Institute of Economic Affairs has shown.
The study also unearthed huge discrepancies in spending power in different counties, painting a picture of economic inequality.
With an average monthly consumption per person of Sh19,625, the average city dweller spends more than twice the national average of Sh9,237.
In contrast, Wajir has the lowest, with a monthly average spending per person of Sh2,705, less than a third the national average.
The inequality in consumption and spending power in different regions is manifested in the fact that 33, or 70 per cent of counties, have per person spending totals that are below the national average.
With a consumption of Sh7,802 per person, a resident of Homa Bay, the county that is in the median in the consumption ranking, spends 16 per cent less than the national average.
Spending in the median county being significantly below the national average is an indicator of regional inequality.
Mombasa, with a per person spending of Sh15,629, Kiambu (Sh13,898), Kisumu (Sh11,827) and Nakuru (Sh10,720) round off the top five.
Consumption per person is highest in counties with high population density, high urbanisation rate, high rainfall and low poverty index.
This is because there is more opportunity for wealth generation and employment in urban areas, while high agricultural productivity relies on good rainfall.
Nairobi and Mombasa have an urbanisation rate of 100 per cent, way above the national rate of 32 per cent.
Kiambu is 62 per cent urbanised while the percentage for Kisumu and Nakuru is 52 and 46 respectively, data from the Kenya National Bureau of Statistics show.
The average annual rainfall in the top five counties is 1,146mm compared to an average of below 680mm in the bottom five counties. It means the average rainfall in the top five counties is almost double that of the bottom five.
Inversely, counties with the least spending power are affected by harsh environments and are generally low income regions.
Wajir, the county whose residents have the lowest monthly purchasing power, has an urbanisation rate of 15 per cent.
It is followed by Mandera with a consumption per person of Sh3,491 and an urbanisation rate of 18 per cent. In third place from the bottom is Turkana whose average resident spends Sh3,768 per month, followed by Samburu with Sh4,797 and West Pokot at Sh4,889.
IEA found a correlation between purchasing power and poverty. The bottom five counties are among the eight poorest, with poverty indices ranging from 66 to 88 per cent.
In contrast, counties whose residents and families have the five best spending power have poverty indices ranging from 22 to 40 per cent.
When Newsplex looked at consumption per household, ranking of counties changed little. The analysis of the consumption level per household in every county reveals that Nairobi still leads with Sh62,529 per household per month.
It is followed by Mombasa at Sh54,640, Kisumu (50,542) and Lamu (48,426). Kiambu rounds off the top five with Sh48,077.
Lamu is an outlier because it does not have the characteristics of other top spenders.
Lamu residents have a high purchasing power despite the county’s low population density (426 people per kilometre square), below average rainfall (609mm) and low urbanisation rate (20 per cent). See related story below.
The average family in Nairobi consumes three times as much as a family in Wajir. The other bottom counties in terms of consumption per household are Turkana, Marsabit and Samburu. These are mainly semi-arid low income regions.
Thirty-two counties have a consumption per person below the national average of Sh40,678. The consumption per person in the county in the middle — Nyeri (Sh35,507) — is 13 per cent below the national average.
One out of six shillings spent on domestic consumption in Kenya is by a Nairobian.
The county spends more than the next three counties combined. The top three counties in terms of total consumption in 2015 in nominal terms were Nairobi (Sh844 billion), Kiambu (Sh309 billion) and Nakuru (Sh236 billion).