Boosting Skills in Kenya’s Informal Sector: A Key to Sustainable Employment and Economic Growth

NAIROBI – The need for the Kenyan government to prioritize the informal sector as a critical area for job creation and sustainable career paths for the country’s unemployed youth has been highlighted by Mr. Peter Tena, the Kenya Internally Displaced Persons Patron.

According to Kenya News Agency, the informal economy, which comprises approximately 84 percent of the nation’s workforce, represents a significant part of Kenya’s economic structure and is a primary source of employment. However, the sector faces major challenges in skill development, despite its capacity for job creation at a rate estimated to be four times higher than that of the formal sector.

The Economic Survey 2022 reveals that the informal sector, dominated by Small and Medium Enterprises (SMEs), accounted for 80 percent of the more than 900,000 jobs generated in 2021. Mr. Tena emphasized the importance of the Jua Kali industry in Kenya during a meeting aimed at encouraging the youth, particularly those from families affected by internal displacement due to conflicts, to seek employment in the informal sector. He noted that the industry requires less capital for startup, facilitates industrial decentralization, and promotes inclusive participation.

Mr. Tena pointed out that the MSME economy absorbs nine out of ten young people entering the workforce, translating to an average of 750,000 individuals annually, while the formal wage corporate economy accommodates barely 50,000. With about three million Kenyans employed in formal jobs across both the public and private sectors, the potential for MSMEs to significantly contribute to the economy is clear, he added.

Despite these opportunities, Mr. Tena highlighted the absence of standardized qualifications in the sector, which complicates the process of identifying existing skills and determining skilling needs. He cited the example of skilled workers like welders, plumbers, carpenters, masons, and electricians, who often lack formal certification. Nevertheless, he expressed optimism about the National Industrial Training Authority (NITA)’s initiative to prepare a training program aimed at equipping craftsmen with the necessary skills to improve their training delivery.

During the meeting in Free Area, Mr. Tena urged the youth to consider the informal sector and stressed the need for both county and national governments to provide financial inclusion and support to the Jua Kali sector, akin to other sectors pivotal to the country’s industrialization and development. He underscored the critical role of job creation in economic growth, poverty reduction, and stimulation of economic activity through increased household incomes and consumer spending.

Highlighting the Kenya Kwanza government’s Bottom-Up Agenda, Mr. Tena pointed out the commitment to transforming the MSME economy by focusing on key pillars such as agriculture, housing, healthcare, and the digital and creative economies. He advocated for a collaborative effort between the government and the private sector to create an enabling environment for businesses, emphasizing the importance of reducing bureaucratic obstacles, improving infrastructure, and offering investment incentives.

Mr. Tena concluded by emphasizing the necessity for the government to invest in high-potential sectors like manufacturing, agriculture, and tourism, and to leverage technological advancements and entrepreneurship for the creation of new job opportunities. By doing so, Kenya can unlock its human and economic potential, significantly reduce poverty, and improve the quality of life for its citizens.