Kenya’s national wealth is likely to continue growing below the elusive double-digit target unless the country invests heavily in sustainable business models for the growth of the dominant MSME sector, business leaders said yesterday.
At a forum in Nairobi, they said the government and corp orates should join hands in helping the micro, small and medium-sized enterprises. This, they said, will reduce job losses, as big corporates continue to lay off staff.
Thousands of workers have been retrenched since last year as companies look to contain costs by automating their operations to enhance efficiencies.
Job losses have largely been blamed on a “tough operating environment” and increasing adoption of technology.
“All the strong economies are strong because they have developed an environment in which the SMEs can be nurtured,” the Kenya National Chamber of Commerce and Industry chairman Kiprono Kittony said. “If we focus on the growth of the economy and create a sustainable environment for the SMEs, then those many jobs that are being lost in big banks, in big media houses, in manufacturing and in companies that can no longer compete with China will be recreated in the SMEs.”
Latest official unemployment rate in Kenya stands at 40.2 per cent, according to the state statistician Kenya National Bureau of Statistics, from a record low of 12.7 per cent in 2006.
With an estimated 800,000 graduates joining the job market annually, there are fears the rate of joblessness may worsen in the coming years.
Technical and Vocational Education and Training Authority director general Kipkirui Langat said there’s urgent need to refocus the MSME business model to manufacturing, from trade and commerce.
“The only way to ensure this [sustainability of the SMEs] is achieved is through continuous skills development and to ensure that as other skills are phased out, we ensure these people are empowered to get new skills,” Langat said. “We have seen a number of companies try to lay off people. It is not because these companies want to close, but there is… change in opportunities in terms of skills required.”
They spoke after the KNCCI partnered with Capital Group to launch a Sh800 million project targeting SMEs through networking, training and access to credit.
On Tuesday, UAP-Old Mutual announced it will lay off up to 100 staff in its Kenyan unit to cut costs.
UAP-Old Mutual joins dozens of companies that have resorted to staff lay-offs since last year.
They include Equity Group (400 employees through natural attrition), Standard Chartered Bank (about 300 staff) after it transferred its shared services centre to India, Sidian Bank (108) and Family Bank (undisclosed).
Others are Naivasha flower farm Karuturi that sent home 2,600 employees, Sameer Africa (600), Portland Cement (about 1,000), and Uchumi Supermarkets (253). Kenya Flouspar company scaled down operations and sent home about 700 workers.
National carrier Kenya Airways laid off 118, Airtel (150), Kenya Meat Commission (118), among others.