Discussion Paper No. 191 of 2017 on Harnessing Kenya's Demographic Dividend: Effects of Population Dynamics

Abstract

This study investigates the effects of population dynamics as Kenya strives to reap from demographic dividend arising from accelerated economic growth as the population changes. At the moment, 78 per cent of Kenya’s population is aged below 35 years mainly due to high fertility, leading to a high dependency ratio that limits savings to invest. As a result, the government is committing more resources to non-productive sectors in the provision of education, health and other facilities for children. The high population growth is not in tandem with job creation, leading to high unemployment levels mostly affecting the youth aged 15-35 years. In the recent past, the country has experienced a rise in cases of insecurity, youth radicalization, terrorism, drug abuse and alcoholism, which are partly blamed on youth unemployment and frustrations. Through the Economic Recovery Strategy and Medium Term Plans, although without much success, the government has made several interventions to create jobs through Kazi Kwa Vijana, Uwezo Fund, Women Enterprise Fund, Youth Enterprise Fund and Access to Government Procurement Opportunities. But unemployment remains a major challenge against the ever increasing population, culminating into a large unemployed working age population. These are the basis that motivated this study which uses data for the period 1970-2012, and employed an economic growth model. The study found that the country stands a chance to benefit from demographic dividend if appropriate policies are put in place.