This article first appeared in my weekly column with the Business Daily on March 5, 2017
A few weeks ago, a local television station aired the story of a young man who is an orphan, had been admitted to some of the most prestigious learning institutions in the country but was now living the life of a pauper. Dishevelled and unkempt, he looked like he was living the life of a homeless man; yet when he spoke, his clarity of mind and intelligence were unquestionable. This week a video of African children in the Congo working in mines went viral. The two children in question were eight and eleven year old boys, working in awful and dangerous conditions, barely making income and living a life of destitution and hopelessness. Why are these stories important? They are important as they reveal the extent to Africa is mismanaging the potential and promise of young people on the continent.
The average age of an African is 19.5 years, yet the average age of an African leader is 65. Is there any wonder then, as to why Africa’s leaders seems to be chronically unable to catalyse a young labour force and apply it to the development of young people themselves, that of their countries and the continent at large? In fact, sometimes it seems youth are seen as a demographic liability, not asset.
In Kenya the rate of youth unemployment is dire; 80 percent of those unemployed are under the age of 35. There are several factors that contribute to this figure the first of which is poor education. The Brookings Institution points out that 62 percent of Kenyan youth aged 15-34 years have below secondary level education, 34 percent have secondary education, and only 1 percent have university education. Skills are a crucial path out of poverty; indeed education makes it more likely for Kenyans to not just to be employed, but to hold formal jobs that are more secure and provide good working conditions and decent pay. So the fact that the country is doing such a poor job in educating the youth translates to the relegation of those young people to the periphery of the promise of the country.
Secondly, even among those who are educated, most are ill-equipped to be absorbed into employment. A study by JKUAT made the point that the commercialisation of tertiary education in Kenya has led to overcrowding in the institutions due to the increase in enrolment. This ‘massification’ policy by universities is characterised by degree programmes that do not address the job market. As a result, millions of Kenyans are poorly trained and become frustrated graduates who cannot find employment. Another report released by the World Bank stated that tertiary education in Kenya is characterised by a persistent mismatch of skills between what is taught and the requirements in the labour market. Thus, even education itself does not guarantee employment in this country.
Thirdly, due to the aforementioned dynamics, most young people are left to fend for themselves, invariably in the informal economy. The informal economy employs 80 percent of Kenyans and yet this sector of the economy is grossly neglected. Sadly in many ways, the neglect of the informal economy is the neglect of the youth as it is only in this sector that most youth with limited resources are able to start ‘hustling’ and earn a living. The cost of formalisation from tax payments to compliance to minimum wage, means that the informal sector is the only choice, as it has the lowest barriers of entry for economic enterprise.
The good news is that it is not too late to act, but the nature of action must be very different to ongoing activities. At the moment, most youth interventions either operate in silos with the limited creation of long lasting structures and partnerships; are funded unsustainably where programs end when donors pull out; or provide interventions that do not address the needs of the youth effectively (think Youth Fund). Youth need a combination of on-going employment opportunity; credit lines for enterprises through the deployment of blended financial vehicles (grants AND loans); skills upgrading (life, business, management, financial and technical skills) and mentorship. Only in doing this will the country, and indeed continent, leverage the demographic dividend that is the young people of Africa.
Anzetse Were is a development economist; firstname.lastname@example.org
This article first appeared in my weekly column with the Business Daily on January 8, 2017
Cabinet Secretary for Education, Matiang’i, stunned the country when he released the results of the Kenya Certificate of Secondary Education (KCSE) late last year. Only 141 As were earned compared to over 2500 in 2015. The pattern was similar in all other grade classes, with far fewer students earning the top grades when compared to previous years. Some schools that were top performers barely managed to garner top grades this year. While this has surely aggravated some schools, students, teachers and even parents, the importance of how Matiang’i supervised and structured the entire KCSE exam process should not be underestimated.
Firstly, it seems clear the rot of dishonesty and cheating had overtaken the education system with ominous results; corruption had become a way of life in Kenya’s education system. When schools, teachers, students and parents all collude to cheat their way into earning top marks, the very core of the future of the country is compromised as cheating becomes an accepted way of life. Students witness adults devising schemes to cheat as normal. How then can a country expect to create a generation of honest, hardworking Kenyans when the young see such profound deviousness embodied by their elders? If anything, the dubious manner in which previous exams were conducted cemented the culture and essential acceptance of cheating and corruption in the minds of future generations.
Secondly, the culture of cheating was crippling the country; students were no longer interested in learning. An analyst made the point that the culture of cheating had eroded the importance of learning in the minds of millions of students. Many students saw no need to pay attention in class as they were assured of being leaked the final exam papers just before the exams. Consequently some saw no need to focus and absorb what they were being taught as they were assured of As regardless of whether they understood the content or not. This attitude then would follow students into further education, where again schemes were created to earn the top marks without having learnt the content required for the course. This has had serious consequences: firstly, transcripts presented to potential employers mispresented the students’ competencies and strengths. As a result, employers had no tool with which they could select the best and position them in relevant positions. Secondly, cheating meant many students entered the workforce as essentially incompetent as they had not truly learned the full body of knowledge expected of them. As a result, employers quickly realised that top marks account for nothing and thus had to spend millions more training job entrants in basic skills. This is a waste of millions of shillings that could have been better spent had honesty been the norm. Additionally, those who cheat their way through school bring with them a culture of eating where they have not planted, of reaping where they did not sow and of viewing corruption as a legitimate tool to use in professional life.
Thirdly, cheating has a detrimental effects on economic development. If the country has a distorted means of assessing student performance, how can the country assess where the country stands in terms of the literacy and educational competence of the youth? How can the country determine subject and geographical areas that need special attention and strategy? Cheating in the education sectors makes it impossible for the country to develop relevant strategy to improve the education sector and better position the sector to be a catalyst for the development of the country.
Matiang’i and his team should be applauded for having the grit to take on the culture of corruption that had riddled the country’s education system. The next step should now be a thorough assessment of curricula to ensure that education at all levels equips the youth with relevant skills to earn a fruitful living and push the country’s development forward.
Anzetse Were is a development economist; email@example.com
On November 13, 2016 I spoke on a panel on KTN on the disparity between Kenya’s GDP growth statistics and the lived economic reality of Kenyans.
On November 9, 2016 I was part of a two person panel on K24 discussing the state of the Kenyan economy.
This article first appeared in my weekly column in the Business Daily on November 20, 2016
I have been getting several questions pertaining to what is ‘really’ happening in the Kenyan economy. Many Kenyans see incongruence between economic growth statistics and their own lived experience. According to the World Bank the economy is expected to grow by 5.9 percent in 2016; the Kenya National Bureau of Statistics reported that Kenya’s economy expanded by 6.2 percent in Q2 2016. However, several companies have closed down operations in the country and thousands of jobs have been lost this year alone. There are numerous variables that may be informing why Kenyans do not seem to be feeling the positive effects of economic growth.
The first is that GDP growth and Ease of Doing Business data do not capture the reality of the growth and Ease of Doing Business in the informal economy where over 80 percent of employed Kenyans earn a living. Therefore, one cannot extrapolate positive overall statistics as reflective of performance of the informal economy. To what extent does Ease of Doing Business research reflect improvements in the business environment for informal businesses? Parameters such as increased ease with regards to tax compliance and business registration inform Ease of Doing Business performance, yet these are parameters with which informal businesses largely do not intersect. Thus, perhaps the incongruence stems from the fact that the economy from which millions earn a living is largely ignored by official data gathering and analytical efforts.
With regards to companies closing and job loss, several factors at play; I will focus on manufacturing and the banking sector. Manufacturing in this country is under threat because the cost of doing business for manufacturers in Kenya remains high particularly with regards to electricity, transport, cross-county taxes and, frankly, corruption. Additionally, the country has allowed the entry of cheap goods, particularly from Asia, to flood the market; goods that benefit from protection and subsidies in their home economies which is not reflected here. The combination of these factors is making Kenya an increasingly uncompetitive location for manufacturing which is diametrically opposed to the Government’s industrialisation agenda. With regards to the banking sector, job shedding seems to be informed by automation and the interest rate cap. Mobile and e-banking means that many customers do not need direct human contact to effect the transactions they require. The interest rate cap has removed a key risk management tool that banks used to manage information asymmetry with regards to credit worthiness. As a result, banks seem to have limited space to make numerous loans as the risk buffer is no longer present. Fewer loans means fewer staff are needed to monitor loan compliance.
Kenyans are also concerned that economic growth is not associated with job creation; the country seems to be stuck in the ‘jobless growth’ rut. Again, this is informed by several factors. Firstly, Kenya’s economic growth is services driven, and services produces far less jobs than manufacturing for example. The main services sub-sectors that are labour intense are health, education and hospitality; sub sectors such as telecoms and financial services need far less labour. It is no secret that tourism in the country has been hit leading to job losses; and even when there is marginal recovery, a limited number of jobs are created and those are seasonal. Until the manufacturing sector is given the attention it requires such that economy is driven by export-led manufacturing, the ‘jobless growth’ challenge will continue. Finally, the education system in the country is doing a gross disservice to the youth by making millions of young people essentially unemployable. 62 percent of Kenyan youth aged 15-34 years have below secondary level education. Further, Kenya is characterised by a persistent mismatch of skills between what is taught and the skill requirements of the labour market. Thus most youth are poorly educated and those who are well educated are not trained in skills the labour market seeks.
Finally, financial mismanagement at both national and county levels is compromising growth. It seems that government funds that are meant to be economically productive and generate economic activity do not reach intended projects. As long as this continues to occur, jobs and growth that could have been created by government investment and financing will not materialise.
All these factors inform the disconnect between rosy economic statistics and the reality Kenyans feel on the ground; and these will persist if there is no change in financial management and economic development strategy going forward.
Anzetse Were is a development economist; firstname.lastname@example.org
This article first appeared in my column in the Business Daily on October 16, 2016
Last week South Africa’s President Zuma made a state visit to Kenya highlighting the relations between the two countries. Beyond the agreements that have been reached, there are key lessons each country can learn from the other in terms of fostering robust and sustainable economic growth.
One key lesson for Kenya from South Africa is education; South Africa’s literacy rate is about 98 percent, Kenya’s is about 82 percent. But the real disparities reside in tertiary education. Currently only 4 percent of Kenya’s student population make it to tertiary education; in South Africa this figure is 20 percent. In terms of leading universities on the continent, South African institutions regularly top the list. In the Times Higher Education Ranking of the top ten universities in Africa, half are South African; and none are below number six. Only one Kenyan university (University of Nairobi) features in the top ten, and at number eight.
Beyond ranking, a key concern of the Kenyan education is curriculum relevance. A report released by the World Bank this year stated that tertiary education in Kenya is characterised by a persistent mismatch of skills between what is taught and the requirements in the labour market. This is not to say that South Africa is perfect but at least there is an active, public interrogation of curriculum with active participation from government. Kenya could certainly learn from South Africa here.
A second lesson for Kenya from South Africa is manufacturing and industry. South Africa is the continent’s most industrialized economy. Manufacturing contributes about 15.2 percent to South Africa’s; while in Kenya this figure has been stuck at 10 percent. This is not to say South Africa’s manufacturing sector is perfect, but Kenya could learn about increasing diversity in manufacturing. Manufacturing in South Africa is diverse constituting of numerous industries such as agro-processing, automotive, chemicals, ICT and electronics, metals and, textiles, clothing and footwear. Kenya’s manufacturing sector is dominated by food and beverages which constitute up to 70 percent of the sector according to some estimates. Again, Kenya can look to South Africa and learn how to diversify the complexity and build the role of manufacturing in the economy.
Now let’s look at what South Africa can learn from Kenya. East Africa is a bright spot in Africa largely because region is not commodity reliant. As the biggest economy in East Africa, Kenya’s resilience against the commodities slump is an important lesson for South Africa. A senior researcher at the South African Institution of International Affairs argues that the importance of commodities to South Africa’s economy cannot be overstated as they generate approximately 60 percent of South Africa’s foreign exchange earnings through exports. Indeed, the analyst makes the point that the commodities slump poses serious economic problems for South Africa, not only because of the extensive connectedness between mining and the rest of the economy, but the financial services sector was built on mining.
A look at South Africa’s export profile reveals that the top exports of South Africa are gold, diamonds, platinum, and iron ore. The commodities slump has fundamentally negatively affected the economy particularly in managing the current account deficit. South Africa’s economy shrunk by 1.2 percent in the first quarter of 2016; juxtapose this Kenya’s robust growth Q1 growth of 5.6 percent. South Africa could learn from Kenya better buffering its economy from commodities slumps.
The second lesson for South Africa from Kenya is black entrepreneurship. Given the complex history of South Africa and the legacy of apartheid, the face of South African private sector does not reflect the racial composition of its population. In fact there is a story that some in South Africa say that if whites knew how much money they would make by ending apartheid they would have voted against it a long time ago. And while programmes such as Black Economic Empowerment sought to rectify economic racial inequality, all it seems to have delivered is a few blacks contributing to white owned companies and hopping from company to another collecting dividends. South Africa has an important lesson to learn from Kenya in building black entrepreneurship. Indeed, some estimates state that the South African economy could grow by five percent in the future if the government and private sector invest R12 billion into 300,000 black-owned small businesses.
Kenya understands the power of black entrepreneurship and as an article in the Mail and Guardian states, perhaps the most meaningful economic change for millions of South Africans can come from a focus on developing small enterprises.
Anzetse Were is a development economist; email@example.com
This article first appeared in my weekly column with the Business Daily on October 2, 2016
It is no secret that Kenya has a serious unemployment problem. Kenya’s official unemployment rate stood at 9.2 percent in 2014 and a report released by the World Bank this year put Kenya’s youth (aged 15-24) unemployment rate at 17.3 percent compared to 6 percent for both Uganda and Tanzania. Unemployment rate refers to the share of the labour force that is without work but available for and seeking employment. Therefore those who are under-employed or (poorly) self-employed are not captured in this figure. If both these categories were included, the number would be much higher. Some put the unemployment rate at 40 percent.
Education is linked to unemployment in Kenya. At the moment, the education system is failing Kenyan youth miserably. In terms of primary and secondary education, FSD points out that although Kenya implemented universal primary education additional costs of uniforms and books prevent many from attending school. And even when families who are able to pay for primary school costs they often cannot afford the fees to pay for secondary school. Secondary schooling is expensive and rarely accessible in underserved areas.
The Brookings Institution points out that 62 percent of Kenyan youth aged 15-34 years have below secondary level education, 34 percent have secondary education, and only 1 percent have university education. As a study by the Jomo Kenyatta University of Agriculture and Technology (JKUAT) points out, skills are a crucial path out of poverty; indeed education makes it more likely for Kenyans to not just to be employed, but to hold jobs that are more secure and provide good working conditions and decent pay.
As it stands, Kenyan youth are barely making it to secondary school and thus are relegated to never having an opportunity to have a job that is stable and well remunerated due to the high qualification requirements of formal employment. Further, often poorly educated Kenyans are too poorly equipped to competently manage small businesses leading to low levels of productivity and profitability that characterise the informal economy. In short, the lack of access to education relegates millions of Kenyans to a cycle of poverty as they do not qualify for ‘good’ formal jobs and often do not have the skills sets to be effectively self-employed.
Sadly even of those who do attain tertiary education, most are ill-equipped to be absorbed into employment due to the disconnect between what is taught at universities and what the labour market actually requires. The JKUAT study makes the point that the commercialisation of tertiary education in Kenya has led to overcrowding in the institutions due to the increase in enrolment and this ‘massification’ policy by universities is characterised by degree programmes that do not address the job market. University administrations compromise the quality of education by accepting students without improving facilities to absorb them and seem focused on financial gain when expanding education programmes. As a result, millions of Kenyans are poorly trained and become frustrated graduates who cannot find employment.
Another report released by the World Bank this year stated that tertiary education in Kenya is characterised by a persistent mismatch of skills between what is taught and the requirements in the labour market. Kenya’s post-secondary qualifications are not adequately skilling young people, and thus many graduates are unable to find jobs due to their poor skills sets, despite the achievement of tertiary qualifications. Indeed, according to the World Bank’s Enterprise Survey for Kenya, about 30 percent of firms surveyed stated an inadequately skilled workforce as the most important constraint inhibiting growth.
Clearly the education system in Kenya is creating a mass of young people who do not have the skills required for employment or self-employment. In this failure Kenya is not only exacerbating the unemployment problem, the country is failing to leverage the demographic dividend of a young and active labour force. It is crucial that this failure in the education system is addressed if Kenya is to achieve Vision 2030.
Anzetse Were is a development economist; firstname.lastname@example.org
This article first appeared in my weekly column with the Business Daily on July 31, 2016
Last week scholars from Japan shared highlights from the publication Contemporary African Economies: A Changing Continent under Globalisation in which the scholars state that growth in Kenya is not inclusive and has failed to redistribute wealth to the poor. They rightly observe that the manufacturing growth sector is becoming thinner than before and that productivity in the agriculture sector is static. They suggest government should invest in human resource development including education. Let’s look at three crucial weaknesses with the Kenyan model with regards to agriculture, manufacturing and education.
A cursory look at the agricultural sector in Kenya reveals serious productivity problems. According to the Kenya National Bureau of statistics the agriculture sector accounts for 60 percent of total employment yet contributes about 25.9 percent to the Gross Domestic Product (GDP) of Kenya. So the effort of 60 percent of employed Kenyans contribute a measly 25 percent to GDP; clearly there is a productivity problem. Systemic problems that beset the sector according to the government’s agriculture, rural and urban development sector report include the inadequate exchequer releases. So it is interesting that an analysis of the 2016/17 budget reveals that government reduced allocation to the department of agriculture by KES 1.73 billion and fisheries by KES 510 million when compared to last year. Although this was compensated by an increased allocation to livestock the reality is that agriculture, livestock and fisheries combined constituted a paltry 2.4 percent of the total budget. Although the problem in agriculture cannot be solved solely by throwing money at the problem, allocating less than 3 percent to such a crucial sector is telling.
Factors that negatively inform agricultural productivity include the high cost of inputs, low absorption of new technology and low farmer skills levels. The sad reality is that this is an old story that persists; so government’s action to solving these issues is wanting. Strategies that should be front and centre is to seriously address the land holding problem, reduce the cost of inputs and provide farmers with better schemes to improve their equipment and skills levels so that productivity is boosted.
Secondly is the manufacturing question where on average the sector has been growing at just over 3 percent per year while the economy has been growing at just over 5 percent. Thus the share of manufacturing of GDP is actually declining, not static as is the common perception. To be fair government is making effort to address problems with infrastructure but the sector suffers from inadequate financing as well as challenges with skilled labour. In my view government should leverage its own strategy as well as develop Public-Private-Partnerships to develop industry and manufacturing with two factors in mind: first absorb low skilled labour given that Kenya’s population’s average years of schooling is 6.5 years, second promote labour intensive manufacturing to create jobs for Kenyans. Again, here to be fair government is focussing on labour intensive manufacturing in the Kenya Industrial Transformation Programme of which one of the key sub-sector is textiles and apparel. However, government needs to focus on reducing cost of production, facilitate access to long term patient finance, and improve curricula to ensure students are taught relevant skills so that manufacturing can play a stronger role in job creation and economic growth.
The education problem translates into an informal employment and slumped growth problem. In terms of informal employment, education entry requirements are too high for most Kenyans to meet thereby barring them from the more lucrative, productive and secure formal sector jobs. As a result about 80 percent of Kenyans find less secure, lower paying and frankly low productivity jobs in the informal sector. Productivity is a particular challenge and a study by the World Bank indicates clear links to education levels. In the informal sector the education level of managers is highly correlated with the level of labour productivity. Labour productivity for firms with managers that have no education or only primary education is only 72 percent of that of firms with managers that have vocational training or a university degree. Although the formal sector tends to absorb better educated Kenyans, private sector consistently articulates there is a massive skills gap between what Kenyans are taught in schools, universities and vocational schools and what the labour market actually needs. Thus government strategies for education are to better link curricula with labour market skills needs and develop strategies to improve education and skills levels in the informal economy to boost productivity.
Anzetse is a development economist; email@example.com