WB: Talent is lost on wasteful activities

Juakali sector products in landies road where they sell variety of utensils ,burglers,sufurias ,pans and many other metal products that are handmade by kenyans on 11th JANUARY 2017 [PHOTO: DAVID GICHURU/STANDARD]

Most great talent in Kenya is wasted on rent-seeking activities and jua kali jobs, delaying much-needed economic take-off, the World Bank has said.

The Washington-based institution said in a report that Kenya's output per worker could increase by 196 per cent if human resources were moved to productive areas.

“The level of distortion in this economy is very high that it is bringing down overall productivity,” said WB Senior Economist Allen Dennis.

The global lender cited corruption and nepotism as some of the factors that have consigned qualified workers to non-productive jobs.

Discourage firms

The WB in the 18th edition of Africa’s Pulse also accused policymakers in sub-Saharan Africa of coming up with incentives that discouraged firms from becoming formal for this misallocation.

An estimated 83.1 per cent of the country's total labour force or about 13.3 million persons eke out their living in the informal sector, where production is mostly bogged down by inefficiencies.

There are fears that the recent decision by the State to introduce a presumptive tax on kiosks and small stores might discourage lots of small businesses from registering. However, the issue of rent-seeking is likely to stir up Kenyans.

David Ndii, an economist and critic, has been reported in the past describing the emerging trend where every Kenyan is doing everything possible to supply the Government as the “casino economy". “It is very unproductive. It yields returns but they are not producing goods and services,” says Dr Ndii.

Misallocation of talent is prevalent in the agriculture and manufacturing sectors. The WB report noted a disparity in productivity for different firms in Kenya. “In Kenya, firms in the 90th percentile of productivity are 290 per cent more productive than firms in the 10th percentile of productivity,” read part of the report.

This gap is about 87 per cent in Ghana, 39 per cent in Ethiopia, and 26 per cent in Côte d’Ivoire. Labour economists have attributed this to skills mismatch, with colleges churning out skills that are not needed in the market.

“Every year, about 10,000 students graduate from university. But of these, 7,000 do not have the skills required by the job market, yet we would have already spent millions on them,” said Jacob Omolo, an economics lecturer.