The ever-growing national population continues to pile pressure on the government to create more job opportunities as it is estimated by 2030 half of the global workforce will be from sub-Saharan Africa which Kenya is part of.

A report by the International Monetary Fund (IMF) indicates the odds are quite high as these countries face high fertility rates, with youth populations yet to peak.

According to Kenya Federation of Employers (KFE) data, unemployment in Kenya currently stands at 12.7 per cent, with the youth between the ages of 15 and 34 years who form 35 per cent of the population, having the highest unemployment rate of 67 per cent.

New jobs created

“A million youths enter into the labour market annually without any skills, some having either dropped out of school or completed school and not enrolled in any college,” FKE said in a statement.

This means by the quoted year, five million more youths will be unemployed if job opportunities continue to be scarce.

However, data by the Kenya National Bureau of Statistics (KNBS) shows that employment slightly increased in the modern and informal sectors, excluding small-scale farming and pastoralist activities, going up from 19.1 million in 2022 to 20.0 million in 2023. The total new jobs generated in the economy were 848,200 in 2023.

“In the year under review, wage employment in the modern sector grew by 4.1 per cent which translated to the creation of 122,800 new jobs in the sector,” the report reads.

The total number of self-employed and unpaid family workers within the modern sector was estimated to have increased from 168,100 in 2022 to 172,400 in 2023. The informal sector created 720,900 thousand new jobs and accounted for 85.0 per cent of all the new jobs created in 2023.

Kenya still has high potential in creating more job opportunities for the youthful population through the private sector although it is also struggling due to varied factors in the country.

Formal employment

“By sub-Saharan African standards, Kenya has a large private sector, which accounts for around 70 per cent of total formal employment. As a result, the dynamics of the private sector are a key determinant of the trajectory of the Kenyan economy,” a World Bank report reads.

According to the report, Kenya suffers from formal-informal dualism in the sense that the formal large private firms get access to loans quite easily but the informal comprising the small and medium enterprises continue to face financial difficulties despite creating job opportunities for the larger population.  They are characterised by lower value-added activities, poor access to capital inputs and technology, and limited connectivity to supply chain and market opportunities.

“Recent private sector growth has been driven by the services sector, but this has proved insufficient to address Kenya’s increasing employment challenge,” it noted. 

The private sector currently struggles with the challenges of accessing finance from commercial banks due to the high lending rates thereby affecting its capability to create more opportunities to help cater for the growing population and spur economic growth.

Accordingly, a CEO survey by the Central Bank on the perception of the growth of firms next year indicated that most of the Captains of Industry are relying on the performance of their firms to determine whether they will create employment in 2025. 

It has also been established that the growth may be limited due to limiting domestic factors.  “Increased taxation, cost of doing business and reduced consumer demand were reported as the key factors that could constrain the firm’s growth in the next 12 months,” the report reads.