Saturday August 17 2019
Residents stage protests outside the East African Breweries plant in
Kisumu on December 7, 2017, calling for employment. PHOTO | FILE |
NATION MEDIA GROUP
Thousands of families stare at bleak economic times following a
wave of employee layoffs announced by leading companies in the past few
weeks.
The job losses in commercial banks, breweries and cement manufacturing sectors sharply contrast the lauded economic growth painted by official data and present policymakers with the need to rethink a working solution for a country whose economic growth contradicts its job market.
In the past one month, at
least six companies have signalled staff layoffs, which come with
economic ripple effects given the number of dependents that rely on the
close to 2,000 people set to lose their jobs.
East African Portland Cement Company (EAPCC), Telkom Kenya, Stanbic Bank of Kenya and East African Breweries Limited (EABL) have already notified employees of the looming layoffs, citing the need to trim their payrolls. Two other banks are said to have issued similar notices this week.
TOP-DOWN APPROACH
The
difficult economic times cited by the affected companies is in sharp
contrast to the improving business environment that has seen Kenya move
several steps in the Ease of Doing Business ranking.
Those to be sacked now join a pool of other jobless youth at a
time when universities are spewing at least 50,000 graduates per year
into the job market.
While technological disruption and increasing automation in the service industry, which is a key sector in the country’s economy, may be blamed for the increasing unemployment, years of policy miscalculations, corruption and poor planning has driven Kenya’s job situation into the abyss.
MANUFACTURING
Economic
analysts contend that Kenya has missed lots of job creation chances in
the multibillion shilling projects it has been implementing in the past
five years with deals entered without factoring in the country’s
interests.
Dr Paul Gachanja, Kenyatta University School of Economics dean, says the country should have grabbed the opportunities presented by infrastructure projects to spur job creation, specifically in the manufacturing sector.
“If we used
these projects to promote local industries in supplying raw materials
alone, then you would have ended up with a longer benefit.
"It is these projects that give you that higher figure and the macro level that the economy is growing, yet the money made ends up going back in material purchases, loan repayment and in some cases labour costs,” Dr Gachanja told the Saturday Nation.
POOR PLANNING
The
standard gauge railway (SGR), for example, presented an immense job
creation and industrialisation opportunity for the country but this was
missed at the negotiation table where Kenya signed for a loan compelling
it to source labour and raw materials from China.
The
result is failing cement companies, which would have reaped heavy
benefits from the mega project that sourced cement from China.
The railway line, which is now temporarily halted at Naivasha as Kenya routes for financing to take it further west to Kisumu, has been running at losses, with piling operation and maintenance bills.
Analysts
believe that Kenya could have planned well and prepared its local
industries and labour market to reap maximum benefits from the project,
ranked the largest since independence.
According to Nairobi-based economic analyst Robert Shaw, the economy got a double-edged sword treatment with relative calm from the political truce between President Uhuru Kenyatta and Opposition leader Raila Odinga, and the combination of a war on corruption and succession politics, which started ‘too early’.
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