Capital Accumulation and Persistent Inequality in Kenya

Abstract

Despite the constant economic change, urbanization and financial deepening in Kenya, the gains from growth have been unevenly distributed among households, regions and social groups. The paper explores the issue of persistent inequalities in Kenya using Thomas Piketty's theory on accumulation of capital with the assumption that inequality worsens when growth rate of capital (r) is more than the economic growth rate (g). The paper takes a conceptual and contextual analytical approach, suggesting that Kenya has structural conditions that are conducive to a Pikettyan divergence dynamic: ownership of appreciating land in urban areas, real estate, financial assets, and productive enterprises is disproportionately held by capitalists, while a significant share of the population relies mainly on labor income, informal work, and low-productivity economic activity. As a result, economic growth does not have to produce unequally distributed gains in wealth accumulation and intergenerational mobility.