Informal sector creates 85pc of new jobs in 2023

Kenya’s economy expanded by 5.6 per cent in 2023 and managed to create 848,200 jobs, with 720,000 new jobs, or 85 per cent, coming from the informal sector, new data shows.

Kenya has a large informal sector, famously known as Jua Kali, that contributes significantly to employment and income generation. According to Economic Survey for 2024, more people are leveraging the sector to make ends meet.

Kenya National Bureau of Statistics (KNBS) reports that in the year under review, the number of persons engaged in the informal sector grew by 4.5 per cent, from 15.9 million to 16.7 million.

In 2022, around 19.1 million people were employed in Kenya, an increase of over 815,000 individuals from the previous year, mostly in the informal sector. Roughly 15.9 million people worked in informal conditions, whereas close to 3.2 million were employed in the formal sector.

Economic activities

In 2023, employment in both the modern and informal sectors rose to 20.0 million. The informal sector employed 16.7 million people, followed by 3.3 million in the formal sector.

The most popular economic activities in the informal sector are wholesale and retail trade, and hotel and restaurant services, which account for 58 per cent of the employment, or 9.7 million employed persons. The informal sector contributed to the 5.6 per cent growth of the 2023 economy, up from 4.9 per cent growth in 2022.

President William Ruto said last week that his government is implementing new laws and policies to facilitate growth in IT-enabled services, which will see slightly over 1 million Kenyans employed.

He announced that these measures aim to unlock opportunities in the Business Process Outsourcing (BPO) services sector. The goal, Ruto noted, is to scale up government investments in the relevant infrastructure, including national broadband and digital hubs, to create jobs for at least one million digital workers in the next five years.

“We are determined to claim our fair share of the BPO pie for the benefit of our young men and women who are eager to contribute to growing our economy,” he said. President Ruto highlighted Kenya’s strengths, including a large, skilled youthful workforce and government policies prioritising the digital economy as a strategic pillar of the Bottom-Up Economic Transformation Agenda.

Education system

Others are an education system that emphasizes digital skills, TVET training, a strategic geographical location aligning with global time zones, and proficiency in English, a language widely used in major economies.Ruto made these remarks during the launch of Call Centre International (CCI) Global Contact Centre at Tatu City in Ruiru, Kiambu County, which has already created more than 5,000 jobs. However, Kenya’s unemployment rate marginally decreased from 5.64 per cent at the end of 2022 to 5.6 per cent, according to the statistics office. Unemployment among the youth during the same period was, however, fairly high at 13.4 per cent.

The age group with the highest level of unemployment was 20 to 24 years old, with an unemployment rate of over 15 per cent.