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Job creation is a critical engine for ailing economy

 Jua kali artisans in Naivasha. The informal sector in Kenya employed about 15.26 million individuals as of 2021. [Antony Gitonga, Standard]

The role of job creation in driving economic growth in Kenya cannot be overstated, particularly in the context of Kenya Kwanza's government economic plan.

Creating more job opportunities for the country's citizens can significantly reduce poverty levels, increase household incomes, and stimulate economic activity through enhanced consumer spending and taxation.

The Kenya Kwanza Bottom-Up Agenda prioritised five key pillars - agriculture, micro small and medium economy, housing and settlement, healthcare, digital superhighway and creative economy.

To increase job creation, the Kenya Kwanza Bottom-Up Agenda is committed to transforming the micro and small enterprises (MSME') economy.

It highlighted that the formal and informal MSMEs engaged about 85 per cent of the Kenyan workforce, which translated into about 16 million out of 19 million people.

Moreover, it stated that the MSME economy absorbs nine out of 10 of the young people joining the workforce which translates to 750,000 people on average while the formal wage corporate economy barely absorbs 50,000.

It underscored the fact that about three million people work in formal jobs in both the public and private sectors, with the private sector employing two million people and the public sector employing just under 900,000 people.

It emphasised the fact that when MSMEs are properly established, they can contribute significantly to the economy.

Consequently, to achieve the goal of job creation, the Kenya Kwanza Bottom-Up Agenda committed to transforming MSMEs and proposed establishing MSME business development centres in every ward, and an industrial park and business incubation centre in every Technical and Vocational Education and Training (TVET) institution.

It also proposed to end regressive taxation, bureaucracy and regulatory compliance costs by reviewing all business licences and capping licence fees at 1.5 per cent of total turnover and enacting an administrative burden law (similar to the US Reduction of Paper Work Act) to ensure that no business spends more than four person-hours a month on tax and regulatory compliance.

In addition, the Kenya Kwanza Bottom-Up Agenda proposed to end the criminalisation of work by enacting a right-to-work law, making trading licences and provision of a trading location an entitlement to every citizen who applies.

Lastly, it indicated that the Kenya Kwanza government will commit Sh50 billion a year to provide MSMEs with 100 per cent access to affordable finance through Saccos and venture capital, equity funds and long-term debt for start-ups and growth-oriented SMEs.

Furthermore, the creative economy was recognised as one of the significant actors in the economy. It recognised creative work, mostly done by the youth, added value to Kenya's industry through the exportation of certain materials such as fashion, craft industries, and leather among other products.

To enhance the growth of the creative economy, the Kenya Kwanza Bottom-Up Agenda committed to working with stakeholders to expand the space for creativity, including in the area of freedom of expression and protection of intellectual property rights.

It also committed to mainstreaming arts and culture infrastructure (theatres, music halls, art galleries) into the infrastructure development programme and identifying dedicated streams of resources for their development.

Further, it committed to working with stakeholders to identify the incentives, capacity building and other support required from the State to scale up cultural production and the creative economy.

Lastly, it committed to mainstreaming the creative economy in Brand Kenya and commercial diplomacy, including appointing accomplished Kenyan artistes and creative sector personalities as cultural ambassadors among other commitments in the arts and crafts, film and music.

If the Kenya Kwanza Bottom-Up Agenda is implemented, it has the potential to greatly improve the economy and the lives of Kenyans.

The government has started implementing some of the ideas. For instance, to address the issue of unemployment among the youth, the government and private sector have collaborated to launch an ambitious programme called the Kenya Youth Employment and Entrepreneurship Accelerator Program (K-YEEAP).

The programme, which was unveiled by the Kenya Private Sector Alliance in Nairobi, aims to create one million job opportunities within a year by providing business, technology, and finance training to individuals under the age of 35, along with direct employment opportunities for selected candidates.

K-YEEAP's focus on entrepreneurship is critical to empowering young people to generate job opportunities and support the country's economic growth, which has been severely impacted by the Covid-19 pandemic.

With the backing of the private sector, the government is confident that K-YEEAP will succeed in its objective of creating a million jobs in just one year.

Other ways of promoting job creation

The government should consider working to create an enabling environment for businesses to thrive. This can be achieved by reducing red tape, improving and building quality infrastructure to connect domestically and globally, and providing incentives for investment. By doing so, it can attract both domestic and foreign investment, which can in turn create more jobs and drive economic growth.

The government should also consider investing in sectors such as manufacturing, agriculture and tourism that have a high potential of generating numerous job opportunities. It is also vital for the government to harness the technological advancements and entrepreneurship that are creating new and different jobs.

In conclusion, the main engine of job growth is the private sector. The Kenya Kwanza government should therefore work closely with the private sector and take public policy actions that will enable it to achieve its goals towards job creation as articulated in the Kenya Kwanza Bottom-Up Agenda.

This will unlock Kenya's human and economic potential and significantly reduce poverty as well as the quality of life of its citizens.

Elsie and Maryann are tax consultants at Ernst & Young LLP. The views expressed herein are not necessarily those of EY.

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