Reports that majority of Kenya’s best brains are being wasted in less productive or non-productive activities such as rent-seeking, are disheartening. A World Bank reported released last week, showed that Kenya is suffering from misallocation of talent, with a lot of people stuck in non-productive jobs on farms and factories.
“The level of distortion in this economy is very high that it is bringing down overall productivity,” said World Bank Senior Economist Allen Dennis. Every year, close to half a million students leave college. Armed with degrees, they join an ever-growing pool of job-seekers. Despaired, most of them seek solace in the informal sector doing odd jobs.
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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 government to introduce a presumptive tax on kiosks and small stores might discourage lots of small businesses from registering.
But the shrewd ones have been joining what economist David Ndii calls the 'casino economy.' Here is where the so-called tenderpreneurs thrive. Kenya cannot become a middle-income economy, as is envisioned in the development blueprint Vision 2030, if it cannot utilise its talents well.
The country should move into an industrialised economy, yet a lot of people who should be working in these industries are consigned in subsistence farming and jua kali. Unfortunately, some of the issues that have contributed to the misallocation of talents include corruption and nepotism. And policymakers, said the World Bank, are to blame.
Policymakers have been offering incentives that discourage firms from becoming formal for this misallocation. Misallocation of talent is prevalent in the agriculture and manufacturing sectors. The WB report noted a disparity in productivity for different firms in Kenya.
Of course, there is also the crisis of skills mismatch, with colleges churning out skills that are not needed in the market. The country should give incentives for colleges to offer courses that impart in learners marketable skills.