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Why the government must focus on boosting skills in the informal sector

The government needs to refocus on the informal sector to create jobs at a faster rate and get thousands of unemployed youths into sustainable careers.

The Kenya Internally Displaced Persons Patron Mr Peter Tena indicated that the informal economy constitutes an important component in the economic fabric of the country and a notable source of employment.

Mr Tena pointed out that about 84 percent of Kenya’s workforce is in the informal sector, posing the biggest challenge in skills development.

The rate of job growth in the informal sector, he added, is estimated to be four times more than in the formal sector.

According to the Economic Survey 2022, 80 percent of the slightly more than 900,000 jobs created in 2021 were in the informal sector dominated by Small and Medium Enterprises (SMEs).

Speaking during a meeting to drum up support for the uptake of informal jobs by youths whose parents have been internally displaced due to conflicts, the patron said the Jua Kali industry must be encouraged in Kenya as it requires less capital to establish, adding that this helps in industrial decentralization as well as inclusive participation by the masses.

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

Mr Tena 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.

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

Mr Tena indicated that despite the huge opportunities, the lack of standards in the sector makes it difficult to map out existing skills and gauge the skilling requirement.

For instance, he said while thousands of workers in the sector are experienced expert welders, plumbers, carpenters, masons and electricians, few have the certificates and testimonials to prove their worth to railway, road, and building contractors.

However, he expressed optimism that National Industrial Training Authority (NITA), a State Corporation established under the Industrial Training Act Cap 237, revised in 2011, has now prepared a training programme to equip craftsmen with the necessary pedagogical skills to enhance their training delivery.

While urging the youth to embrace the informal sector during the meeting held in Free Area, the patron indicated that going forward, the Jua Kali sector requires attention and financial inclusion by both county and national governments just like other sectors heavily contributing to development in the country’s industrialization process

He said that 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,” added the patron.

He observed that the Kenya Kwanza Bottom-Up Agenda prioritized 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,” he added.

Mr Tena said both levels of government should continue working to create an enabling environment for businesses to thrive. This, he said 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, he further pointed out, 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.

He observed that the main engine of job growth is the private sector. The Kenya Kwanza government Mr Tena said, 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.

By Anne Mwale and Dennis Rasto 

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