Rural poor left out as the rich hog three affirmative funds

Government jobs programmes should be recalibrated to address more effectively some of the challenges the labour market faces, reveals a Nation Newsplex review of jobs data.

The employment initiatives need a sharper focus on the large informal sector and hard-to-reach groups, according to a World Bank analysis of public safety nets and jobs programmes spending. Four in five employees work in the informal sector, a ratio that has been constant since 2010.

The programmes were created to respond to challenges in the labour market, which include a gap in jobs creation between the formal and informal sectors, growing job deficit affecting disadvantaged groups, low productivity and quality of work.

Kenya is not producing sufficient jobs to keep pace with demographic change, and this will contribute to an even wider job deficit in the labour market in the future.

However, the funds and services have not been equitably distributed, with the rural, low educated poor least likely to benefit from them. For instance, the coverage of the affirmative funds – Uwezo Fund, Youth Enterprise Fund and Women Enterprise Fund − differ across counties, with poorer areas most deprived.

Additionally, due to differences in lending practices, payouts vary considerably among counties for the Uwezo Fund. Wealthy and low educated individuals are overrepresented among possible recipients of the three funds, with the World Bank’s audit finding that over a quarter of potential beneficiaries are rich.

People of low education are also more often possible beneficiaries than highly educated individuals, representing up to three-quarters of potential beneficiaries. “The funds are available to low educated individuals who are at-risk but may miss individuals who are in the lower wealth quintiles,” states the Kenya Social Protection and Jobs Programmes Public Expenditure Review.

The Uwezo Fund and the Youth Enterprise Fund together receive more than a quarter of jobs programmes funds, while the Women Fund accounts for the third largest share of total spending (15 percent).

The three demand-side programmes aim to expand self-employment and aid job creation among young adults and women.

Demand-side interventions create new jobs and programmes that support intermediates to match employers with jobseeker in the labour market while the supply-side investments aim at improving jobseekers’ skills.

Another demand-side programme is the Export Processing Zone Authority (EPZA), which commands about a fifth of the spending – the second highest. It aims at increasing employment through the provision of attractive business conditions for export-oriented companies. Such firms created over 14,000 new jobs between 2013 and 2017, and contributed close to 20 percent of the total manufacturing employment in Kenya in 2017. The programme also contributed to indirect job creation by demanding local services and goods. The survey, however, points out that there is no way of establishing how many jobs would have been created without the EPZA.

In 2018, there were 2.9 million employees in the formal sector compared to 14.9 million in the informal sector, show figures from the 2019 Economic Survey.

The wide gap in the two sectors’ contribution to employment will not be bridged anytime soon given that over 90 percent of jobs created last year were in the informal sector. An earlier Newsplex analysis found that the 78,400 new jobs created in the formal sector in 2018 were fewer than the number of students who graduated from public and private universities in 2016, which the Commission for University Education put at 88,773. It was also a six-year low and a 42 percent drop from 134,200 in 2013.

Additionally, data from the 2015/2016 Kenya Integrated Budget Survey Labour Basic Report indicates that the time-related underemployment rate is 20 percent. The survey measures visible underemployment, where a person’s work hours are insufficient, falling below a 28 hour-threshold a week, though they are willing and available to work more hours.

Despite the efforts by the jobs programmes, Kenya is not producing sufficient jobs to keep pace with demographic change, and this will contribute to an even wider job deficit in the labour market in the future. Currently, nearly two-thirds of Kenyans are under age 24 while the country’s youth dependency ratio, which measures the burden shouldered by the productive part of the population to support the economically dependent, is high.

According to the 2019 census report, Kenya’s population is 47.6 million with an annual population growth rate of 2.2 percent. Growing a skilled workforce and creating jobs is critical if the country is to reduce the dependency.
Jobs programmes are critical in supporting school-to-work transition for the large cohorts of youth entering the labour market and improving overall productivity. It is estimated that about 900,000 youth enter the labour market every year, more than all jobs created in 2018. The new entrants join a long queue of unemployed and underemployed past school leavers and graduates from institutions of higher learning.

Jobs programmes which clearly address the needs of those in the informal sector also typically reach the more insecure and poorer segments of the population and can support more inclusive growth. “Well-designed jobs programmes can encourage labour demand, improve productivity, improve formalisation, improve the skills of workers, and support better matching of individuals to suitable jobs,” states the report, published late last year.

In addition to increasing employment, Kenya will also need to improve the quality of jobs, especially for vulnerable groups such as the youth, women, people living in rural areas and those with low education.

Agriculture, the dominant sector in the economy, accounting for about a third of the total value of the economy and the second largest contributor to wage employment, is a low-productivity sector with low-quality jobs and high underemployment rates. Figures for the Economic Survey 2019 show that one in eight wage-employed Kenyans work in the agriculture, fishing and forestry industry.

Apart from the affirmative action initiatives, the County Industrial’s Support Initiative “One Village One Product”, which trains poor people in villages, is the only one targeting rural areas. Its trainings focus on adding value to local products to enhance local economic development. However, only a few people have benefited and the numbers continue to drop (declining by a third between 2016 and 2017), finds the World Bank survey.

The supply-side programmes of the National Industrial Training Authority (NITA) offer low-cost skills and technical training and attachments to industrial workers. It also offers industrial degree sponsorships for women and industrial attachments for university students. However, besides displaying a gender gap, over half of potential beneficiaries for industrial trainings and more than three quarters of possible recipients for the industrial attachment belong to the richest 40 percent. Wealthy men are over half of overall potential beneficiaries for industrial training and attachments offered by NITA.
Another body, the National Employment Authority, has a programme that provides counselling and placement services to jobseekers. But even though unemployment is highest in North and North Eastern counties, the services of the authority are only available in central and southern parts of the country. Opening new offices in counties more affected by unemployment can help to increase coverage.

On the backdrop of these challenges, spending on jobs initiatives as a percentage of total government expenditure has stagnated since 2015, with donor spending exceeding government contributions in 2017.
Public spending on jobs programmes is increasing but remains very low as a share of Gross Domestic Product spending (0.1 percent) and government expenditure (0.3 percent), notes the World Bank Survey.

Almost all the money is spent on the demand side – new jobs creation − with the supply side – skills improvements − getting just 13 percent of allocations.

The World Bank recommends proper evaluation of the programmes’ effectiveness before increasing their budgetary allocations. Additionally, better coordination between ministries and job programmes to avoid overlapping activities can increase efficiency and quality.