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Monday, December 10, 2012

Jobs, Jobs, Jobs

I was in Dar es Salaam for a couple of days last week. I always look forward to my trips to Tanzania for one reason; I get a chance to practice speaking good Kiswahili, often with the taxi driver.

Juma the taxi driver had moved to the city recently in search of work and a better life. Like millions of young Africans he moved to the city in search of work and a better life. His parents relied on remittances from him to purchase agricultural inputs.

Like many of Africa’s young adults, Juma graduated from high school and had no skills. As driver, Juma was struggling to pay his living expenses and send remittances to his family in Iringa. The taxi company Juma works for is a small; staggered by local government levies, police shakedowns and punitive statutory taxes.

Two decades ago a majority of unskilled school leavers like Juma could find gainful work in the countryside. But this is no longer the case. Today, only teenagers and adults aged 50 years and above comprise the majority of the population engaged in farm labor. The population aged between twenty and late forties are more likely to seek non-farm employment, often migrating to towns and cities.

In 2011, Afrobarometer, which conducts research on public attitudes on economic and political social matters in Africa, asked Kenyans what they considered to be critical problems that government must address. Management of the economy and unemployment were the top two. Essentially, Kenyans expect the government to provide jobs. This fits with the political rhetoric in this campaign season. At his coronation as the ODM’s presidential candidate, Mr. Odinga proclaimed that his administration would focus on three priorities: job; job; jobs.

More than the past three governments, the next government will have to deal with the onerous challenge posed by the high proportion of the population who are of working age; a phenomenon known as the demographic dividend. Coupled with the demographic dividend is the veritable structural transformation at two levels.

The first level of structural transformation characterized by rapid urbanization – driven in part by unprecedented migration to towns and cities by families seeking jobs and better lives. The second level of structural transformation is the significant sector shift in output and employment from agriculture to manufacturing and services.  Agriculture now accounts for just 25% of Kenya’s GDP, down from 40% in the first decade after independence.

The next government must do two things: provide a progressive policy and institutional environment to support inclusive and sustainable urbanization; provide an enabling investment and entrepreneurial climate to support the industrial and service sectors to create new high quality jobs to absorb the bulge of potential workers.

The Kenya Economic Update report produced by the World Bank in collaboration the Kenyan government, and released last week, does not paint a rosy picture. According to the report, economic instability, weakness in infrastructure and pervasive corruption constrain business growth and job creation.

Based on the Kenya Integrated Household Budget Survey and the 2009 Census, the World Bank report provides very helpful insights into Kenya’s employment market. Farmhands comprise the largest single category of wage jobs. A majority of non-wage employment is in agriculture. A small minority of Kenyans is employed in engineering and technical fields. Domestic workers, street vendors, skilled trades like dressmakers, carpenters, and motor vehicle mechanics make up proportion of non-farm self employment. Only 2 out of 5 wage jobs are modern or formal.

But here is what I find disconcerting and think every responsible Kenyan ought to lose sleep about. Kenya’s working age population – the demographic dividend – is expanding by circa 800,000 annually, while modern sector wage jobs are growing at 50,000 per year. Essentially, only 6.25% of the workforce entering the job market can find high quality, well paying jobs. This is worrisome and is a tinderbox for social and political instability. 

There is great scope to increase public investment in agriculture to increase productivity and catalyze an eruption of cottage industries for value addition. We must trim government and cut wasteful spending. A smaller government would stimulate private sector growth through outsourcing of non-core government functions, such as licensing, permits and transport.

There is a great opportunity to reform education to focus on building technical and entrepreneurial skills necessary for a 21st century competitive knowledge economy. We must a focus on vocational training and skills development through apprenticeships in a public-private sector partnership. More importantly, the government needs to adopt tax and expenditure policies that will create incentives for local savings and investment to support rapid job creation, especially through creation of small businesses. 

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