OPINION

Demographic Transition and Growth in Kenya

April 28, 2010

Wolfgang Fengler



Kenya’s population has doubled over the last 25 years, to about 40 million people, and rapid population growth is set to continue. According to recent UN projections, Kenya’s population will grow by around 1 million per year – 3,000 people every day – over the next 40 years and will reach about 85 million by 2050. These are projections; the actual numbers depend on government policies and the broader economic environment; and they may turn out differently. But in the past population science has proven to be relatively accurate, as social structures and behaviors tend to change gradually.

How will this rapid population growth—and the even more rapid urbanization that accompanies it—affect Kenya’s development prospects for the next decades? Among other things, this demographic and geographic transformation will play a key role in determining Kenya’s social stability, which remains fragile after the post-election violence in early 2008.

At first glance, Kenya’s rapid population growth appears to be very steady. In fact, a closer look finds that the growth occurred for different reasons, over two different periods. Until about 2000, population growth was driven by increasing numbers of children. That is no longer the driver. The number of children per family has fallen sharply, from 8.1 children in 1978 to 4.6 children in 2008, and it is projected to possibly reach 2.4 children by 2050. Based on these trends, the total number of children aged 0 to 14 is expected to increase by only 40 percent by 2050, from 17.5 million to 24.5 million. But the total population will nonetheless more than double, due to several-fold increases of adult population groups.

Figure 1 - Kenya today (2010) and tomorrow (2050) – Double the population but not many more children
 
Source: World Bank computations based on United Nations, 2009, World Population Prospects

Why does Kenya’s population continue to rise rapidly, while family size declines? There are two reasons.  First, due to high fertility in previous decades, there are many more families in Kenya today.  So even though families are smaller, the total number of children continues to grow.  Second, Kenyans are living longer.  Life expectancy is projected to increase from 54 years today to 68 years by 2050.  As a result of these trends, the fastest growing population groups in Kenya are 15 to 64 years—and these are exactly the population groups that work.  From only 22 million working-age people today, Kenya by 2050 will have about 56 million working-age people. 

Thus, Kenya is at the start of a demographic transformation. As fertility declines and Kenyans live longer, we will see a dramatic improvement in the “dependency ratio”:  the proportion of the working-age population will grow much faster than the young and elderly population groups that depend on them. This implies that Kenya is in a position to benefit from a “demographic dividend”, especially by 2020, when this gap starts to widen (see figure 2). 

Figure 2 – Kenya’s demographic transformation

Source: World Bank computations based on United Nations, 2009, World Population Prospects

Kenya’s situation is not unique. Africa as a whole is growing at the same pace as Kenya. The continent has just passed the 1 billion threshold, and it will reach 2 billion by 2050 and continue to grow thereafter. Many middle income countries, and the world as a whole, are also in the middle of this demographic transition, benefitting from a growing labor force and declining dependency ratios. At the same time, the population balance between the continents is shifting:  in 1970, there were two Europeans for every African, but by 2030, there will be two Africans for every European.

While rapid population growth remains a challenge in many poor countries, the debate has changed in recent years.  The World Bank’s World Development Report for 2009, “Reshaping Economic Geography”, found a strong correlation between population density and economic development.  Rich countries are urban countries.  No country has ever reached high income levels with low urbanization. Population growth increases density and, together with rural-urban migration, creates higher urban agglomeration.  And this is critical for achieving sustained growth because large urban centers have two distinct economic advantages. First, as more people interact, there is more scope for innovation. Young people need jobs, but they also create jobs. Kenya has an educated workforce and a dynamic service industry, which typically has lower barriers of entry than agriculture or manufacturing, and provides opportunities for young entrepreneurs.

Second, larger groups of population living in close proximity allow for economies of scale. Companies can produce goods in larger numbers and more cheaply, serving a larger number of low-income customers. Over the past decade, Kenya has seen the emergence of a number of companies such as Safaricom and BIDCO that have successfully targeted the large numbers of lower and lower-middle income groups – the “bottom of the pyramid”. Their business model is viable because they can serve a multi-million customer base, which has increased by 25% over the last 10 years and which continues to grow rapidly.

In light of these facts, Kenya’s future pattern of population growth can be a force of good.  A large urbanizing and well-educated population tends to generate a strong middle class and vibrant private sector.  Economic development may be easier to achieve and sustain–though it is not guaranteed.  If Kenya wants to harvest the opportunities of its demographic dividend, it needs to bring fertility below 3 children per family (now projected by 2050) and also to provide needed services to a rapidly growing and urbanizing country on a much larger scale. 

Over the last few decades, Kenya did not make sufficient progress in upgrading its infrastructure and improving its governance. These constraints made it difficult for new industries to take root, especially in manufacturing, and opportunities to create jobs on a large scale were lost.  To ensure that Kenya does not miss future opportunities, and takes full advantage of the demographic dividend that may come to it, better infrastructure and better governance are key.

The author is Wolfgang Fengler, Lead Economist for the World Bank in Kenya. The author acknowledges valuable inputs by the demographic team of the World Bank.