Economic prospects for Kenya in the context of the COVID-19 crisis

Co-authored by: Amolo Ng'weno and Anzetse Were
May 29, 2020 - 6 mins read
Economic prospects for Kenya in the context of the COVID-19 crisis - cuspers

Originally posted on the FSD Kenya Website, May 29, 2020 

The infection rate of COVID-19 is as yet low in Kenya, but the economic consequences are already biting. Relief efforts are ongoing, but FSD Kenya is starting to look ahead to the recovery. For Kenya to have a robust and inclusive recovery, the recovery needs to include, or even be led by livelihoods of individuals actively earning incomes predominantly from an informal source. In previous research we have called this group of people cuspers – i.e. people on the cusp of escaping poverty but still at risk of falling back into it. Therefore, FSD Kenya has asked the question: How can finance promote the recovery of real sector livelihoods of Kenyan ‘cuspers’ following the immediate COVID-19 crisis?

In order to answer the question, FSD KenyaFSD Africa and BFA Global took a scenarios approach; not forecasts or predictions, but plausible stories, based on data, about how the future might unfold. This analysis reminded us that cuspers have differentiated needs, and that women may be especially vulnerable.  In all scenarios, digitization will increase, but efforts are needed to ensure that the benefits are widely spread.

Macroeconomic trajectories

COVID-19 has created an environment of high uncertainty, unclear and unfamiliar risks, and an unprecedented global shock that has crippled key economic centres across the world. FSD Kenya, FSD Africa and BFA Global conducted a three-week agile scenario process to create the different worlds that Kenya faces based on three macroeconomic trajectories for the country.

The first is a relatively short V-shaped bounceback in which growth resumes in late 2020 with reasonable growth levels by mid- 2021. The second is a longer and more debilitating U-shaped limpback in which recovery is slower, with 2019 growth rates likely only reached by 2023; and finally more fundamental fallback  in which there is long-lasting harm to the economic structure, any upticks are not sustained and a new lower level of economic activity endures beyond 2023.  However, GDP growth is an aggregate measure, and conceals great divergences of economic experience, even within Kenya itself.


Because of the differentiated impact of COVID-19, we adopted the lens of a large group of Kenyans dubbed ‘cuspers’ who we define as low and moderate income working Kenyans, largely in in the informal sector, who operate outside the easy reach of formal transfers or funding. A 2015 study using a narrower income-based definition found that almost a third of Kenyans fit into this category; with our broader lens, it is possible that 69% of adults in 2019 can be found into this large group. There are three reasons that inform the focus on cuspers:

Bear in mind that while the scenario process focused on cuspers, FSD Kenya is actively engaged in cash transfer interventions for the most vulnerable.

Detailed cusper scenarios

Using the cusper lens, we considered their experiences and the three worlds that could emerge depending on the country’s macroeconomic trajectory

Gendered impact of COVID-19

An additional insight that emerged during this process is how women are being disproportionately negatively affected by COVID-19 as detailed below:

Implications for COVID-19 responses






Anzetse Were is Economist at FSD Kenya. Twitter: @Anzetse

Amolo Ng’weno is CEO of BFA Global. Twitter: @AmoloNgweno


CITATION: Ng’weno, A., & Were, A. (2020). Economic prospects for Kenya in the context of the COVID-19 crisis. Nairobi. FSD Kenya.

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