Focus on small businesses to generate jobs

And so to graduates with first class honours, unemployed, for years, and even living on the street. And numbers.

One number is around 100,000 a year: that’s the number of new formal sector jobs Kenya is adding each year, reaching a total of 2.785m formal sector jobs by last year.

Another number is around 50,000 a year, which is roughly the number of new graduates exiting Kenyan universities each year.

A third number is five, which is the average time it is taking Kenyan graduates to find a job, according to one 2014 study, which would mean some running total of around 250,000 graduates unemployed at any one time.

It would take years to clear that quarter million, unless we create more jobs. At which point, would it be rude to mention our target, or was it a promise, of 1.5 million new jobs a year? Of course, few of these were in the formal sector, and our graduates are particularly complaining at not getting formal sector jobs. The uproar is not because they can’t hustle.

Including informal positions, there were years, way back, where we really did add some two million jobs a year: like 2011 and 2012. But these are now far behind us, in growth since then of around 600,000 informal sector jobs a year, which is a guess, I might add, or what we politely call: an estimate.

For, being informal sector, those jobs aren’t registered and aren’t countable. Remove those estimates and the achingly slow growth in our formal sector employment has got to be cause for alarm. For salaried, tax-paid, health insurance covered jobs are growing far more slowly than our population.

As a result, just one in seven Kenyans now have a ‘job’ in the sense of an official position, with a contract, a salary, and a first level of social services, being health coverage and an eventual pension.

Yet those of us who create jobs have watched the goalposts narrowing. Those who Tweet have been observing lately that every graduate that we do not give a job to also ends up jobless and thereby, often, homeless. But my own small company typically gets more than 400 applications for every post we advertise. How could we possibly take responsibility for every unemployed Kenyan?

Worse than that, even in doing our part, we have in the last two years been peddling backwards, now employing fewer staff. We have done a lot to improve productivity, and let go of several long-serving staff whose output was either close to zero or of very poor quality. We just couldn’t carry the salaries out of charity and compassion and without a like-for-like equivalence in work delivered. Yet we are a company of passion and idealism and our vision was to create livelihoods.

However, in the real world, every client pushes back on pricing, and lately to levels that are even strange. We sit with invoices to a reputable company entirely unpaid. We engage in discussions with other clients about swallowing the VAT back into a below-cost day rate, and disputes about service pricing equivalent in market rates and costs to arguing with a baker that you want a loaf of bread for Sh10.

We can make up the missing three-quarters of costs from elsewhere, or walk away: not two wonderful choices.

And there lies the real problem. We all told those graduates to become entrepreneurs. But running a formal business that pays taxes is massively hard. It’s harder than getting a degree. It’s harder than getting a Master’s degree – and believe me, I know: I have both. It’s harder than being promoted at speed in a paid position.

In creating a business, you get no breaks at all. We live without overdrafts or finance, without job creation incentives, without investment incentives, without anything, except survival, often viewed and treated by clients and staff alike as if we had some large corporate river feeding our bank account.

Yet it isn’t working for Kenya, all this looking away from what makes small businesses work. Globally, its small businesses that create 95 percent of jobs. Look after your small businesses, you look after your job creation.