Data Hub

Why job prospects in agribusiness and tourism look dim

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Tourists relaxing at a beach in Diani. FILE PHOTO | NMG

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Summary

  • For years, Kenya’s horticulture, high-value agribusiness and tourism have employed thousands of people.
  • Agriculture has been earning the government billions of shillings through export of fruits, cut flowers, tea, coffee and vegetables, among others.
  • These industries have also created millions of job opportunities, helping the country address high unemployment levels.
  • The sectors, however, face a tough future, according to a study by Brookings, an American research company, which predicts that they will employ fewer Kenyans by 2035.

For years, Kenya’s horticulture, high-value agribusiness and tourism have employed thousands of people.

Agriculture has been earning the government billions of shillings through export of fruits, cut flowers, tea, coffee and vegetables, among others.

These industries have also created millions of job opportunities, helping the country address high unemployment levels.

The sectors, however, face a tough future, according to a study by Brookings, an American research company, which predicts that they will employ fewer Kenyans by 2035, in comparison to other African countries such as Rwanda, Ghana, among others.

The study, Addressing youth unemployment in Africa through industries without smokestacks (IWOSS) shows that the share of these jobs will be lower in the country at 35 percent behind Uganda’s 36 percent.

According to Brookings, IWOSS are sectors that are tradable, have high value added per worker relative to average economy-wide productivity, exhibit capacity for technological change and productivity growth, and show evidence of scale or agglomeration economies.

South Africa will see an increase in IWOSS jobs by 73 percent followed by Senegal at 68 percent, Ghana (64 percent) and Rwanda (63 percent).

“Overall, the case studies predict that IWOSS will account for 60 percent or more of new jobs in Ghana, Rwanda, Senegal, and South Africa; however, the share is lower for countries like Kenya and Uganda, which are projected to rely heavily on traditional, ‘smokestacks” industries to 2035,” the report notes.

Exports of horticulture (flower, vegetable and fruits), tea and coffee earned Kenya Sh148 billion, Sh134.3 billion, Sh23.63 billion respectively last year.

The report, done by Brahima Coulibaly and John Page in Ghana, Rwanda, Uganda and Kenya, notes that Kenya’s tourism sector contributes about 10 percent to Gross Domestic Product (GDP).

“Its contribution to employment was about 1 million jobs, accounting for 9.2 percent of total employment, including informal jobs.The tourism value chain includes services related to accommodation, food and beverages, and travel organisations,” it says.

“Kenya has strengths that can be harnessed to promote further development of the sector, including its coastal location, its cultural variety, and diverse wildlife. Kenya’s tourism has one of the highest employment-output elasticities for its IWOSS.”

The report notes that IWOSS in Kenya faces a mismatch between skills demanded and those available in the labour market, partly attributable to weak linkages between education and industry.

“For example, the Kenya case study reveals that ICT firms consider a lack of skills to be one of the factors limiting the growth of business process outsourcing. This skills mismatch is evident in the high weight assigned to problem-solving skills in the ICT sector. Although the government has attempted to position the country as a leading BPO destination, this ambition is not matched by human resources with advanced skills in ICT,” says the survey.

Also, in Kenya, agro-processing and horticulture are the IWOSS sectors with the largest share of low skilled employment at 76 percent and 66 percent, the report indicates.

“In agro-industry and horticulture, inadequate skill levels, especially among small-scale producers, result in a large share of substandard outputs,” the report reveals.

The survey also indicates skills gaps in appropriately trained and qualified personnel in the tourism sector.

It shows that about 20 percent of hotels and restaurants indicated that skilled manpower was a major or very severe obstacle to growing their business.

This is attributed to low manpower.

“At least 5,000 new graduates with tourism qualifications are needed annually compared to only 3,000 produced,” the research says.

Some of the most needed skills in the hospitality industry are customer service, decision making and problem-solving, food technology and information technology.

Others are leadership, oral, written, and interpersonal communication as well as time management.

“Tourism is also limited by exclusion of local micro, small, and medium enterprises (MSMEs) from its value chain,” shows the report.

Factors that will constrain IWOSS growth in the country are unfavourable investment climate such as high electricity bills.

“In Kenya, reliable supply of power and the high cost of electricity pose challenges not only to firms in IWOSS sectors but also to firms across the economy,

“Limited access to reliable electricity was identified as a challenge in ICT, horticulture, and tourism. In 2018, about 89 percent of ICT firms and 91 percent of tourism establishments (mainly hotels and restaurants) reported that they had experienced electricity outages in the past year, averaging 3.5 and 6.3 outages per month respectively,” it notes.

Other hurdles cited include a complex regulatory environment and lack of an export push.

“In Kenya, the business regulatory environment is complex: In fact, the Kenya Enterprise Survey 2018 indicates that 8.6 percent of firms’ senior management time is spent on compliance with the government regulations,

“Some of the main constraints reported include: business licensing and permits, bureaucracy, and corruption,” it notes.

The report shows that the Covid-19 has had an impact on the sectors they were hit hard with lockdowns such as ban of flights.

“The lack of large-scale job creation—in the face of premature deindustrialisation—remains the key challenge to Africa’s structural transformation and overall development. The results from our study offer a compelling solution based on the development of IWOSS. If well supported, these industries can help accelerate job creation and economic development.”

The report, nonetheless, indicates that the country has an opportunity for growth in manufacturing and non-IWOSS sectors.

But, the report notes that Kenya stands out in Africa as a country that has a rapidly expanding ICT-enabled services industry.

“The sector is an important source of growth, contributing 7.3 percent of growth in 2018. The ICT sector represents about 4.5 percent of wage employment in Kenya. ICT has significant linkages with other sectors and enjoys strong policy support from the government,” the study notes.

“Kenya Vision 2030, for example, envisages Kenya to become the top Business Process Outsourcin=g (BPO) destination in Africa.”