Kenyan economy riding on menial jobs, study shows

The country is still reeling from what has been described as ‘shock’ results of last year’s Kenya Certificate of Secondary Education (KCSE) exams.

Education Cabinet Secretary Fred Matiang’i has been lauded for beating the so-called cartels and their shadowy, dormitory-burning ways, and delivered a ‘clean’ examination – just 141 A grades, compared to over 2,000 last year.

By any measure, that’s a scandalous indictment for whatever has recently been passing as a national examination system. But that’s not the whole story – the real impact of Kenya’s sub-par education system will be felt long after the exam system is over.

And it has to do with a structural nature of Kenya’s economy that most of us now take for granted – the fact that the informal sector has become the dominant source of jobs, yet more Kenyans are attaining education at ever higher levels.

The March 2016 Kenya Economic Update report from the World Bank illustrates the dark and dangerous absurdity of the situation. Recent gains in education have been impressive, sparked off in 2003 by the Kibaki administration’s Free Primary Education (FPE).

Among Kenya’s working age population (15-64), at least half have attained a secondary school education or more. For the younger age groups (under 35 years), the percentage is higher, at about 65 per cent. Education goes hand in hand with aspiration, which is why school-going children are always asked what they want to be when they grow up. But the structure of Kenya’s economy is such that most of these aspirations will remain the stuff of dreams.

Every year, nearly 900,000 young people in Kenya reach working age. They join a workforce where the informal sector is responsible for 75-80 per cent of all new jobs created. The majority of jobs in this sector are low skill and low productivity. This may seem abstract, but the World Bank report puts it starkly - the majority of jobs available in the market hardly involve the use of basic cognitive skills.

In fact, most unpaid family workers, self-employed and informal wage workers – who together account for 55 per cent of the labour force – do not use foundational skills like reading, writing or computer at work at all. The only basic skill that is used somewhat intensively in the informal sector is numeracy, as it is used in most adult life to perform market-related calculations such as buying goods, charging for one’s products, and figuring out profit or loss margins.

SUFFICIENTLY PRODUCTIVE

The intensity of use of skills like writing documents, reading, computing, is more for people with higher levels of education, but even so, such jobs are scarce in the first place. In other words, although just 50 per cent of the children who join Standard 1 in any given year will complete Form 4 – such is the attrition rate in the first twelve years of our country’s education system – overall, Kenya’s labour force is the most educated it has ever been.

But the level of informality means that in reality, the economy only ‘requires’ people with merely a Standard 3 literacy level. By then, one would have learned all the reading, writing and arithmetic that a typical informal sector job demands. Kenya’s growth model is not generating good quality jobs, the report states. Economic growth in Kenya has been fuelled by public investment in infrastructure, including railways, roads and energy, and domestic consumption.

This growth model has delivered high economic growth, and also some jobs. However, these jobs have not been sufficiently productive; not only are they low wage, but they actually do not require much from the worker, except in terms of physical strength and some basic arithmetic.

High population growth and consumer demand has spilled over into demand for services, but has not resulted in a take-off in the more dynamic, high productivity services sectors. Our service sector, despite having some pockets of success – for example in ICT and finance – is overly concentrated in the basic personal services like salons and taxis.

A decent living, yes, but if we are to be honest, for far too many people, it is a job that barely makes ends meet, and is nowhere near the potential that their education has prepared them for. Data from the Society for International Development (SID) paints an even bleaker picture.

In East Africa today, the private security sector is one of the fastest-growing employment sectors. SID’s 2016 State of East Africa Report quotes a senior executive of one private security firm in Kenya who estimated that there are anything between 2,000 and 4,000 private security firms in Kenya, employing up to 300,000 people.

Security guards are the perfect example of a low productivity job that generates little value. One is exposed to the elements every day, and deprived of a natural sleep cycle in order to solve a problem that technology fixed a long time ago – lockable doors, and a vigilant and responsive police force, are all one needs to counter most domestic security threats.

Cameras and sensors may come in for commercial buildings and more complex operations. But there is really no reason to have armies of people feebly patting others down at the entries of malls. It is driven by inequality and lack of opportunities.

The SID report highlights that inequality pulls productive assets away from value creation to protecting and securing the assets of the wealthy. In other words, we have a country where the biggest job creator is having poor people look after rich people’s property – a terrible waste of too many Kenyans.

Ultimately, without a demand for skills, there are few options left for Kenya’s educated young people: accept a job that does not even scratch the surface of their cognitive skills, or emmigrate to a country that rewards them better for doing something as basic as being able to read and write.

An immoral person would argue that we should scale down education opportunities to limit aspirations, and have a closer fit between education levels and jobs available. Indeed, this terrible path is exactly what apartheid South Africa did with Bantu education, in which black African children were restricted to learning needlework, carpentry, gardening and music.

Apartheid’s chief architect Hendrik Verwoerd justified it thus: “There is no place for [the Bantu] in the European community above the level of certain forms of labour ... What is the use of teaching the Bantu child mathematics when it cannot use it in practice?”

But it is not all doom and gloom. There is a better way – other countries have shown us small policy fixes that can unlock the latent human potential of a country. Take India’s success in medical tourism. India has always had a strong medical tradition, partly due to the ancient Hindu tradition of Ayurveda. Long before ‘modern’ medicine arrived in India, ancient Hindu surgeons were performing complex operations including excision of tumours, incision and draining of abscesses, extraction of foreign bodies, splinting of fractures, amputations, cesarean sections, and stitching of wounds.

With the arrival of colonialism, this tradition was integrated with Western techniques, which meant that India had an abundance of highly qualified doctors. But the country’s level of infrastructure and development meant that these doctors were mostly only treating dysentery, malaria and snakebites; a huge number were emmigrating to more developed countries where their skills could be better appreciated.

That was until the early 1990s, starting in Chennai (Madras), where authorities implemented a reform package in the medical sector to attract patients from abroad, and make better use of the underutilised medical talent. Facilities were upgraded, private investment encouraged, and hospitals began partnering with hotel chains for accommodation deals for patients’ relatives who might have travelled as well.

Visa restrictions were loosened, and turnaround times speeded up – one can get a visa in a matter of days, or even on arrival depending on the level of urgency of the case. The result was an unlocking of economies of scale, while still guaranteeing quality. In October 2015, India’s medical tourism sector was estimated to be worth $3 billion (Sh315 billion). It is projected to grow to $7–8 billion by 2020.

Chennai alone has an estimated 12,500 hospital beds, of which only half is used by the city’s population, the rest being shared by patients from other states of the country and foreigners. Similar examples can be found closer home. A recent report by McKinsey Global on jobs in Africa advises African governments to identify one or more labour-intensive subsectors in which an African country has a global competitive advantage or could fill strong domestic demand.

POLICY TWEAKS

Lesotho, for example, capitalised on the African Growth and Opportunity Act (2000), granting some African exports duty-free access to US markets. A landlocked nation surrounded entirely by South Africa, Lesotho developed industrial zones for the apparel industry and built rail links between them, offered incentives to foreign investors, and simplified the regulation of the sector.

Today, Lesotho’s apparel exports to the United States are almost 100 times as large as South Africa’s on a per capita basis, and the sector is the single largest creator of jobs, employing about 40,000 people in 2008 in a country of just two million.

Cape Verde, encouraged foreign direct investment (FDI) to ease financial constraints on its tourism sector. To capitalise on the country’s beautiful beaches, it offered investors a five-year tax holiday, exemption from import duties, and unrestricted expatriation of profits.

Revenues generated by foreign tourism increased from $23 million (Sh2.4 billion) in 1999 to $542 million (Sh57 billion) in 2008, and the sector now employs 21 per cent of Cape Verde’s workforce. Sometimes it just takes a few small, deliberate policy tweaks to unleash a country’s potential. Or else, the scandalous waste of people will continue.

—The writer is executive editor of Africa data visualiser and explainer site Africapedia.com