The critical challenge facing Kenya is to raise the rate of economic growth to levels incorporating broad-based improvement in the standards of living and well-being of Kenyans in order to reduce poverty which has increased rapidly in the recent past (PRSP, 2000).
Kenya's economic growth rate declined dramatically from an average of 6.6% in 1970s to 4.2% in 1980s to an average 2.1% in the 1990s. The living conditions of the vast majority of Kenyans are deteriorating rapidly. There is a marked increase in the number of people unable to access clean water, clothing, shelter, health services and education.
Unemployment is a problem in Kenya. Average unemployment is at 23%, and is even higher for youth that drop out of school and for women, averaging 25% in both cases (Chune, 2003). Government services in many cases are no longer available. Growing disparities in access to services have further undercut the living conditions of low-income households. School enrolments, infant mortality and life expectancy have deteriorated (UNDp, 2002).
Kenya's economic objectives of growth, poverty reduction and improved resource utilization and access have remained essentially the same since independence. The quest for sustainable socio-economic development has however been a challenging endeavor, influencing some policy shifts. The strident call has basically centered on poverty reduction, inclusion of those excluded from the enjoyment of the benefits of economic growth and the redistribution of productive resources. What have consequently changed are the strategies to achieve the objectives of sustainable human development focusing on improving the quality of life of the majority poor.
Poverty reduction broadly defined requires processes that help people to improve their capabilities and functioning that enable them to take charge of their affairs (Gondi, 2005). Kenya has come up with many poverty reduction policies since independence, most of which have had little success. The previous pre-1990s poverty reduction policies erroneously assumed that the benefits of rapid growth of key sectors such as industry, service and agriculture would automatically trickle down to all sectors of society.
So more effort was injected into improving economic performance (export incentive, agricultural food processing, etc.), at the expense of promoting societal welfare enhancing projects. For example, some policies like the rural and informal sector development did not receive the much-needed political will and required resource allocation, to be effective.
