State bets on informal economy in job creation drive

A man pulls a handcart outside Parliament Buildings, Nairobi. [Elvis Ogina, Standard]

The government is banking on the informal economy to drive economic recovery and create new jobs at a time millions of Kenyans are struggling to make ends meet.

The National Industrial Training Authority (NITA) observes that Kenya's informal sector has for years been neglected, despite having the potential to create high-value jobs at low entry levels.

"One of the challenges we are facing in job creation is that the majority of Kenya's labour force derives its incomes from the informal sector," explains NITA Director General Stephen Ogenga.

"This becomes a bottleneck because there is inadequate standardisation which makes it difficult to map existing skills in the informal sector and gauge the gaps that exist," he said.

A report by the Federation of Kenya Employers (FKE) published last year found that there are close to seven million informal enterprises in the country as at 2016, 99 per cent of which were unlicensed micro-enterprises engaging workers with at most certificate level of education.

Micro, small and medium enterprises (MSMEs) pay an estimated monthly wage of Sh3,525, Sh4,975 and Sh2,082 per worker respectively," stated the FKE in its report. "These wage rates are below the 2020 statutory minimum wages of Sh13,572, Sh12,522 and Sh7,240 for a labourer in cities, former municipalities and other areas respectively."

This has been made worse following the Covid-19 pandemic that saw millions of Kenyans lose their jobs or become under-employed.

Data from the Kenya National Bureau of Statistics (KNBS) indicates that the pandemic pushed companies to cut jobs, with many sectors recording a freeze in new hires over the past 24 months.

The informal sector that accounts for the bulk of paid wage labourers shed more than 543,000 jobs, with private sector jobs falling 10 per cent from 2 million in 2019 to 1.8 million in 2020, the lowest in more than five years.

Women suffered the brunt of job losses with overall wage employment among women falling by 10.3 per cent compared to 4 per cent among men.

According to NITA, lack of standardisation in the informal sector locks out millions of young people with similar or higher competencies compared to their counterparts in the formal sector.

"Statistics indicate that the informal sector creates jobs at four times the rate of the formal sector," explained Mr. Ogenga. "The training content and curriculum is however very limited for informal sector development and content is still delivered under the apprenticeship model," he explained.

This means trainees are at the mercy of their trainers and the knowledge they gain is thus limited to the expertise and breadth of the trainer. 

"These raises other issues such as a disconnection from partners and other sector stakeholders as well as a mismatch between skills development at training centres and the market demands," he said.

NITA says the introduction of the Competency-Based Curriculum (CBC) has resulted in more confusion and clamouring for control among stakeholders who want to define competence standards across the various professions.

According to FKE, building competitiveness of informal enterprises in the country requires the input of both the government, regulators and private sector to mobilise the scale of resources and policies required to make meaningful change.

"Areas of training needs would include marketing, innovation, contracting and price determination," explains the FKE in its report. "This may be done in the format of targeted tailor-made skills training through workplace-based training programmes."

FKE says the training should also accommodate assessment and recognition of prior learning and certification that entrepreneurs could have attained as industry-recognised skills within the Kenya National Qualification Framework.

This is already happening in the country's ICT sector where self-taught programmers who may not have a university degree often undergo certification courses or exams that recognise and accredit them as practitioners based on their experience. 

NITA  is currently pushing for the Recognition of Prior Learning (RPL) in Kenya, an initiative that aims at promoting the identification, assessment and certification of informally and non-formally acquired skills.

"RPL is expected to benefit thousands of youth in the informal sector who have skills but have been disadvantaged by the formal systems for lack of evidence that they possess the skills," explains NITA Director General Stephen Ogenga.     

The Authority has further prepared a training programme to equip the Master Craftsmen with the necessary pedagogical skills to enhance their training delivery 

According to Ogenga, formalising will also give entrepreneurs in the informal sector access to more financing and support through affiliating with industry associations.

"The informal sector requires attention and financial inclusion by the Government just like other sectors that contribute heavily to advancing the country’s industrialisation goals," he said.

NITA says it has partnered with several companies including KAPA Oil Refineries, Unga Limited, Hyundai Kenya, and Base Titanium to push for expanding industrial training programmes in the manufacturing sector.