Key statistics:
The East African country of Kenya is the third-largest economy in sub-Saharan Africa. Spanning an area of 580,000 km2, its geography, climate and population vary widely and it borders the Indian Ocean in the south-east with its neighbouring countries being Ethiopia, Somalia, South Sudan, Tanzania and Uganda.
The population is currently estimated to be around 56 million and according to current projections, it will exceed 100 million by the end of 2058 and reach 125 million by the end of the century. In 2020, the median age of the population was young, at just 20.1 years.
The country recently achieved lower-middle income status and it has established a diverse economy. However, economic growth has not been inclusive with many Kenyans continuing to live in poverty – an issue that has been compounded by the global pandemic together with persistent socio-economic problems such as corruption, inefficient and inequitable systems, lack of reliable electricity and sanitation, and increasing crises such as droughts.
Approximately two-thirds of Kenyans live in poverty and as a result, the majority – particularly women – are extremely vulnerable with over two-thirds of Kenyan families impacted due to poor nutrition, food insecurity and preventable diseases. In addition, many Kenyans suffer from economic inequality while a minority elite continues to exploit the labour market and resources.
Boosting equitable development
Until the pandemic, Kenya was one of the fastest growing economies in Africa. It is an emerging market-based economy which according to data from the World Bank, achieved growth averaging 4.8% per annum from 2015 to 2019. In 2020, the pandemic impacted the economy significantly but the agricultural sector, which is pivotal to the economy – contributing approximately one-third of GDP and employing more than 40% of the population – remained resilient which helped to limit the GDP reduction. The economy made a good recovery in 2021 although some sectors, such as tourism, remained under pressure. The unemployment rate in Kenya was estimated to be 5.7% in 2021.
Climate change in Kenya is increasingly impacting the lives of Kenya's population and the environment. It has led to more frequent extreme weather events such as prolonged droughts, irregular and unpredictable rainfall, flooding and increasing temperatures. The country is particularly vulnerable to climate change since many key drivers of the economy such as agriculture, livestock, tourism, forestry and fisheries are climate-sensitive.
Kenya’s long-term development strategy Vision 2030 was launched in 2008 and aims to accelerate sustainable growth, reduce inequality, and manage resource scarcity. A key part of the strategy is also to increase access to financial services to the majority of the population. In addition, and as part of the effort to boost equitable development in the country, the Kenya Country Partnership Framework (CPF) is a joint strategy between the World Bank, the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) and the government to promote shared prosperity and reduce poverty.
Unlocking the potential for inclusive insurance
Despite being one of the largest economies in East Africa and a leader in the mobile money market in Africa with a dynamic FinTech ecosystem, there is low insurance penetration due to various factors from a poor saving culture to low levels of disposable income, little financial education and a negative perception towards insurance.
What is very clear, however, is that emerging consumers – who constitute the highest proportion of Kenya’s population (around two-thirds) – are shying away from insurance and opting for traditional, inadequate risk mitigation from sources such as social networks. This means that a huge number of Kenyans remain unprotected against major shocks while the insurance industry remains largely underdeveloped.
In September 2022, more than 60 insurance stakeholders attended the first in-person Microinsurance Network (MiN) and Insurance Development Forum (IDF) co-hosted “Inclusive Insurance in Kenya” country workshop. Kenya is among the 21 focal countries prioritised by the IDF’s Inclusive Insurance Working Group and the workshop participants discussed a broad range of topics including whether the widespread use of mobile money, coupled with a supportive regulatory environment can spur the development of inclusive insurance for the underserved in Kenya. At the end of the workshop, a Kenya Taskforce on Inclusive Insurance was formed which will drive the development of the country’s Inclusive Insurance roadmap and support Kenya’s efforts to leapfrog Africa’s inclusive insurance market.
To unlock the great potential of the inclusive insurance market in Kenya, it is essential that there are the right public policy interventions, a favourable and encouraging regulatory environment, as well as public-private partnerships and development partners (including the many MiN members highlighted in our country report who are already active in the inclusive insurance sector) continuing to work together to reach a huge segment of the country’s population – many of whom are either unemployed or informally employed – who simply do not have access to adequate and affordable financial support.
For further insights on the inclusive insurance landscape in Kenya, dig into our latest country briefing note.
Our monthly country reports provide a detailed overview of specific target countries and their inclusive insurance markets as highlighted in our annual Landscape Study.
All country reports are available to members of the MiN free of charge. If you are not yet a member of the Network but are interested in finding out more about a specific country’s market, our 2022 country reports can be purchased via this link.