Persistent regional income inequalities in Kenya during the COVID-19 pandemic: evidence from a bi-dimensional inequality decomposition analysis

Economic downturns affect subnational regions unevenly, leading to changes in regional income disparities. While some studies suggest that downturns reduce regional inequality, others highlight persistent or worsening disparities. Kenya, Africa's seventh most populous nation, comprises 47 counties with diverse ethnic and geographical landscapes and broad regional income inequality. This study examined the spatial distribution of per capita Gross County Product (GCP) during the COVID-19 pandemic and recovery period, analyzing regional and industrial factors. Using bi-dimensional inequality decomposition (BDID), industrial factors were found to drive inequality and varied regionally. In Central and North Coast regions, the finance and business services and transport and communication sectors were key inequality contributors, revealing a core-periphery structure allowing Nairobi and Mombasa to benefit from agglomeration economies. In Rift Valley, agriculture was the key inequality driver, which reflects the agricultural core-periphery dynamics. Despite significant per capita GCP growth variations, the BDID structure remained unchanged, indicating that the pandemic did not substantially alter regional and industrial income distribution. However, stark GCP disparities highlight the need for government intervention to foster balanced regional development. Policy measures should include reducing transport costs between core and peripheral regions, improving infrastructure in underserved areas, and providing integrated support to smallholder farmers through microfinance, training, irrigation, and market linkages to boost productivity and income.