Institute for Development Studies, University of Nairobi

The paper addresses the relationship between income distribution, regional and sectoral income disparities, and poverty in Kenya. The data used in the estimation of the degree of income inequality are consistent with the National Accounts and the Population Census; three different household groups are distinguisheds urban households, smallholders and other rural families. The within-group income distribution of the two rural household groups are proxied by consumption and land distribution, respectively; while the estimation of the overall income inequality assumes a lognormal distribution pattern. The result of the analysis suggests that income in Kenya is distributed very inequally, with a Gini-ratio in the neighbourhood of 0.60. Moreover, the sectoral decomposition of the total inequality indicates that dualism within rural Kenya is almost as important as the urbanrural disparity. However, the disaggregation at the provincial level adds very little to the understanding of the source of income Inequality, with less than 10 per cent of the variation in income explained by the provincial grouping. The analysis of poverty finds poverty is a rural as well as an urban phenomenon. However, rural poverty is more striking, both in terms of extent and intensity. Indeed, 33 per cent of all the rural households are affected by poverty and their average income equals only 55 per cent of the poverty-line. For the urban households, the figures are 15 and 65 per cent respectively.