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Kenya’s economy groans under weight of its jobless youth

By Frankline Sunday | Published Sun, February 26th 2017 at 00:00, Updated February 25th 2017 at 22:58 GMT +3

 

The future of Kenya’s competitiveness in the global economy remains bleak as the country struggles to contain the heaviest youth unemployment burden in East Africa.

Of a working age population of 24 million, one in every six young Kenyans is unemployed – in Uganda and Tanzania, the figure is about one in every 20.

This threatens the country’s future role as East Africa’s economic powerhouse, with countries like Rwanda and Ethiopia set to catch up with and unseat Kenya’s lead in regional and global labour markets.

Kenya’s youth unemployment has remained consistently high for more than 20 years, and a new report indicates the country is setting itself up for failure in the future marketplace.

Lagging behind

In the 2017 edition of the Global Talent Competitiveness Index, Kenya is ranked 97th in talent competitiveness out of 118 economies globally.

The country is 7th in sub-Saharan Africa, behind Rwanda, Zambia and Namibia.

The study, which was released by a consortium of think tanks led by the Insead Business School, states that Kenya is lagging behind the sub-Saharan mean in several key indicators, including vocational and technical skills, retention of skilled talent and opportunities for growth and development of talent.

Politics and corruption have been singled out as the key impediments to an enabling environment for the development of skilled talent, with the country ranked 113th and 112th out of 118 in political stability and corruption, respectively.

In comparison, Rwanda ranks 70th in political stability and 40th in corruption, placing the country 6th and 91st in sub-Saharan Africa and the world, respectively, in overall competitiveness.

“There is a profound mismatch between, on the one hand, our educational systems that typically do a fair job of forming routine workers and professionals, and on the other hand, the requirements of our emerging technology-driven society where machines are taking over routine jobs,” said Bruno Lanvin, the executive director of global indices at Insead.

Data from the World Bank further indicates that youth unemployment in Kenya has averaged 20 per cent in the last 10 years, rising from 17.1 per cent in 2011 to 17.4 per cent in 2014.

This is despite years of policy interventions meant to lower the country’s unemployment levels, and numerous promises by politicians to tame the crisis.

In the run up to the 2013 elections, one of the economic campaign pledges by the Jubilee administration was 7-10 per cent GDP growth in the first two years of the administration that would in turn create one million jobs.

This was and still remains impractical. Creating enough jobs for the over 800,000 young people entering the Kenya labour market annually would require most of the sectors of the economy to quadruple their 2013 job-creation rates consistently for five years.

The data

A look at several data sets on Kenya’s unemployment crisis over the last 30 years indicates that the economy does not expand enough, and the growth is equally inconsistent to consolidate any gains made in job creation.

This is worsened by Kenya’s population rate that increases by one million people each year.

Using data from the Kenya National Bureau of Statistics, (KNBS) and the 2009 Census, we are able to draw a snapshot of the unemployment burden currently facing each of the country’s 47 counties.

Though unemployment levels vary widely across the counties, it is clear that urban counties, such as Kisumu, Nairobi and Mombasa, and those in arid and semi-arid regions, like Garissa, Wajir and Turkana, tend to have similar levels of high unemployment.

Respondents with low education levels also tended to end up unemployed or in the informal sector.

Counties like Lamu, Samburu, Isiolo, Wajir, Tana River, Marsabit, Turkana and West Pokot reported fewer than 10,000 high school graduates and fewer than 500 university graduates each, indicating future vulnerabilities in developing a skilled labour force.

Snapshot of causes of unemployment in the counties

Over the decades, Nairobi County’s economic gravitas as the capital city of Kenya has pulled thousands of young people from their rural homes to settle in the city looking for jobs or higher education.

Nairobi ranks top in unemployment among the counties, with more than 1.4 million young people expected to join the labour market this year to compete for few employment opportunities.

The highest wage employer in Nairobi is the manufacturing sector, followed by trade, restaurants and hotels. Others are construction, transport and communications, finance, real estate and business services.

A large number of the labour force – an estimated 1.5 million – is self-employed in the informal sector. This is 3.5 times higher than the figure of individuals in formal paying jobs.

Overall, unemployment in the county stands at 14.7 per cent with more women (19 per cent) than men (11 per cent) being out of a job.

In Meru, the 2014 ban on the import of miraa to the UK dealt a heavy blow to what is the country’s leading khat-growing region.

The UK was Kenya’s biggest market for the mild stimulant, and the ban forced many farmers to switch to other crops and devastated the economy of many towns in the county. This will see an estimated 673,000 youth fall under the unemployment rate.

Nakuru is to the rest of the Rift Valley what Nairobi is to the country. This means it faces a similar youth unemployment burden to the capital city, registering the fifth-highest number of unemployed young people.

The town’s fish and agro-based processing factories draw thousands of unemployed youth to the county, and it currently has a potential unemployment burden of 675,000 young people competing for limited opportunities.

Bungoma, Western Kenya’s second-largest county, has 564,000 young people hoping to join the working population this year.

With little in terms of manufacturing, and with agricultural land becoming smaller due to sub-divisions, most of the young people in the county have moved to areas like Kakamega and Vihiga, where opportunities can be sought in the bustling boda boda business.

More than 70 per cent of Bungoma’s population is aged below 30, which could see unemployment in the county reach crisis levels, unless some ingenious solutions are found to address the situation.

Machakos County, the economic centre of the Eastern region, has yet to come up with a strategy that would lead to the creation of at least 500,000 jobs to meet the demand of the growing number of young people not only from the county, but also from the surrounding counties of Kitui, Mwingi and Makueni.

Kilifi, Kisumu and Mombasa also serve as urban magnets for the unemployed, and will need to create an average of 450,000 jobs each year to meet the demand.

Kenya’s devolved system of government was designed to re-distribute resources from Nairobi to all corners of the country to correct the shortcomings of the trickle-down economic growth model adopted by the country since independence.

The idea behind devolution is to enable counties to create regional economic blocs and create investment hubs for a variety of industries, especially agricultural-based manufacturing.

Stronger and more focused support for agricultural activities in the counties would not only have an impact in terms of new jobs created, but also improve the country’s overall quality of life.

This would help reduce the rate of rural-urban migration, which has led to high levels of urban unemployment. The World Bank states that as many as six in 10 residents in the country’s urban areas live in “housing that would be defined as a slum”.

The country’s unemployment crisis is piling pressure on urban centres seen as refuges by the tide of jobless people moving away from the rural counties. Nairobi alone is expected to grow its population by 100 per cent in the next 12 years to 2030.

County governments will need to conduct extensive studies into the causes of the unemployment burden facing their counties, and match existing economic resources and strengths to the available skills.