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Economy

World Bank gives Kenya Sh15bn for youth jobs

Jua kali artisans at work in Nairobi. The Kenyan economy created 841,600 new informal sector jobs in 2015. PHOTO | FILE
Jua kali artisans at work in Nairobi. The Kenyan economy created 841,600 new informal sector jobs in 2015. PHOTO | FILE 

The World Bank has given Kenya Sh15 billion to finance initiatives that help stem the tide of joblessness in the country.

The money, which the bank’s directors approved early this month, is earmarked for the establishment of a business grants programme, support companies that offer to bridge jobs skills gaps among college graduates and to strengthen Kenya’s policy on youth development.

These are collectively expected to cut poverty levels in the country and put it on a firm path to shared prosperity that narrows the ever-growing socio-economic gulf between the rich and poor.

Kenya holds the dubious distinction of being the country with the largest number of unemployed youth in East Africa.

A recent survey of the region’s employment market found that one in every five Kenyan youths of working age has no job.

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The World Bank initiative targets 280,000 young people aged between 18 and 29 years “who are without jobs and have experienced extended spells of unemployment, or are currently working in vulnerable jobs”. The minimum education level required to benefit from the programme is Form Four.

“The project responds to the high numbers of new entrants to the workforce who are presently outpacing the capacity of the Kenyan economy to absorb in productive employment,” the bank said.

The plan comes with a segment for competition in business ideas that is open to those aged 35 years and below.

Winners of the competition will be awarded cash grants to establish startups or expand their businesses to create more jobs — removing a major hurdle for cash-starved entrepreneurs.

Some 33,000 young people are set to benefit from training and business capital this year in the five-year initiative estimated to cost $150 million (Sh15 billion).

Mass joblessness, especially among the youth, is a drag on the economy because it forces unemployed adults to depend on the small number of working class, stretches family resources and makes it difficult for families to save for future investments.

The Kenyan economy created 128,000 new formal sector jobs in 2015, accounting for only 15.2 per cent of total jobs generated last year (841,600 jobs), according to the recently released Economic Survey 2016.

At 128,000, the expansion of the formal employment market lags far behind the number of graduates leaving Kenyan colleges, which stands at more than 400,000 annually.

The World Bank says mass unemployment continues to deny Kenya the opportunity to put its growing labour force to productive use, making it difficult for the economy to reap the demographic dividend.

Unemployment has also been fanned by employers’ insistence that fresh graduates lack specialised skills and experience needed to fit in available jobs — a challenge that the bank seeks to help resolve through the skills improvement plan.

“It is a unique project in that it better prepares young people for the labour market and at the same time supports the creation of new and better jobs in the market,” the bank said in a statement.

To achieve this, the World Bank will establish linkages with private companies to offer youth on-the-job training that addresses the skills mismatch.

A similar initiative announced by the government last June is yet to take off, heralding the World Bank’s intervention.

Treasury secretary Henry Rotich said in his Budget statement last June that companies that hire fresh graduates from colleges and universities would enjoy lower corporate tax — under a programme aimed at preparing thousands of college leavers for the rigours of the labour market.

The government initiative aims to boost employment in the private sector given that the public sector has gone slow on hiring to curb a ballooning wage bill.

Efforts to reach the Cabinet Secretary Monday were unsuccessful as phone calls went unanswered.

The World Bank said improving employability of graduates through skills acquisition as well as triggering a culture of entrepreneurship were key components of its support plan.

It will also work with the Ministry of Public Service and Youth on improvement of policies targeting youth development.

The ministries of Youth and Labour will manage part of the funds and will open accounts at the central bank to access the money.

Part of the cash will be under the custody of the National Industrial Training Authority (NITA) and the Micro and Small Enterprises Authority (MSEA), which will open accounts with yet-to-be-determined financial institutions for onward disbursements.

“Young people are the lifeblood that will drive forward Kenya’s economy. Together we have to do more to create sufficient jobs and ensure young people are adequately prepared to step into these jobs,” World Bank Country Director for Kenya Diarietou Gaye said, adding that peope under 25 years account for the largest number of the unemployed.

The spectre of mass unemployment has continued to haunt Kenya despite the economy growing at an average of five per cent over the past five years.

Development experts say that the government has a crucial role to play in alleviating the pain of such economic misfortunes through policies that promote shared prosperity.

“The best protections a government can provide are education, which makes it easier to pick up new skills, and a strong rate of job creation, which makes it easy to find new employment,” says a report by Commission on Growth and Development.

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