Policy Brief No. 02 of 2023-2024 on Income Shocks and Household Coping Mechanisms: Implications for the Welfare of Children in Kenya

Abstract

Most countries, Kenya included, have been faced with multiple economic turbulence since the onset of Corona Virus Disease 2019 (COVID-19) pandemic. Even before the COVID-19 pandemic could be subdued, the Russian invasion of Ukraine began in March 2022, exposing the world to high food and energy prices. In Kenya, the two crises aggravated a pre-existing situation, from way back in April 2019, where food inflation had surpassed headline inflation. This trend continued all through to June 2023 when food inflation stood at 10.3 per cent. Persistent high food inflation in the country is in part due to poor performance of the agriculture sector which is prone to weather-related shocks due to its heavy reliance on rainfall. Other than price-related shocks, households also face health-related shocks, job losses, death of leading income earners, climate-related shocks among others. To cope with these shocks, households adopt various strategies depending on the nature of the shock. The commonly used coping strategies expenditure cuts, relying on social networks, and borrowing from informal credit channels. In situations where income shocks persist and are widespread, such coping mechanisms may not be sustainable and may have negative effects on household members, particularly children.