Kenyan businesses too small to offer new jobs to youth

Joyce Ngatia, CEO Pemaj Garbage and Cleaning Services during an interview with Standard. [Samson Wire, Standard]

Kenya has many small businesses that are unable to scale up and provide employment to the millions of youth flooding the job market.

This is according to a new report by the World Bank that also offers an overview of the country’s economic environment and outlook.

The 24th edition of the Kenya Economic Update noted that despite the high creation of firms, the businesses appear less able to scale up in what was blamed on weak entrepreneurship outcomes.

“Firms in Kenya have a challenge in scaling up, and as a result, most are small,” said Ramya Sundaram, a senior economist in the Social Protection, Labour and Jobs Global Practice of the World Bank.

The report found that the shortcomings in the entrepreneurial ecosystem included supply factors such as lack of physical capital and infrastructure, and demand factors such as the small size of the internal market as well as accumulation and allocation barriers, such as access to finance.

The World Bank has recommended the adoption of trade, technology and training to remedy the problem. “Improving conditions to support the ability of new firms to scale up and innovate is important to support the creation of better jobs at a large scale,” said World Bank Country Director for Kenya Keith Hansen.

World Bank Country Manager Camille Anne Nuamah said Kenya’s economy has been resilient, experiencing a better recovery from the negative effects of Covid-19 compared to its regional peers. “Moving in 2022, growth is expected to pick at a similar pace to the pre-pandemic trend around five per cent,” said Ms Nuamah.

Federation of Kenya Employers Chief Executive Jacqueline Mugo said the economic indicators are not being felt by firms owing to the pandemic. “It is hard to plan as business people,” she said.