Jua Kali sector is big business, ignore it at your own peril

In 2012, the Government promised it would ensure the Jua Kali sector receives attention and financial inclusion like other sectors heavily contributing to development in the country’s industrialisation process. For Kenya, the Jua Kali traders are a sure way of laying a strong foundation for industrialisation from within as opposed to imported industrialisation, which could very easily create more jobs and wealth abroad than at home.

Kenya’s 2014 Economic Survey indicated 80 per cent of the 800,000 jobs created in 2014 were in the informal and/or Jua Kali sector that is dominated by small and medium enterprises (SMEs). Some studies show that four out of five working Kenyans are in the informal sector. The Kenya Revenue Authority (KRA) supported the Economic Survey report by stating that SMEs absorb up to 50 per cent of new non-farm employment seekers and have an employment growth rate of 12-14 per cent annually.

Jua Kali industry must be encouraged in Kenya for many reasons. First, it requires less capital to establish. This helps in industrial decentralisation as well as inclusive participation by the masses. The sector produces mainly for the local market and helps the country save foreign exchange. It requires less expensive machinery and technology that can be locally produced and help establish the country’s technological capabilities. Jua Kali operators do imitate the products that are already in the market thus spreading technological skills.

Asian example

Kenya’s Jua Kali trends are similar to other countries like India, which has witnessed the rise of one-person establishments, and where the informal sector accounts for a significant percentage of employment. In India today, the small-scale sector is said to account for 80 per cent and 99 per cent of Indian manufacturing employment and establishments, respectively.

For India, there seems to have been a deliberate and sustained policy to support the sector. The policy is anchored on Mahatma Gandhi’s teachings that developing countries cannot develop via mass production but via production by the masses.

Gandhi’s philosophy has been interpreted to mean that mass production is only concerned with the product, whereas production by the masses is concerned with the product, the producers, and the process. Mass production means establishing large-scale conveyor belt-based factories in cities, which leads people to leave their villages, their land, their crafts, and their homesteads and go to work in the factories.

Although the Jua kali sector is a huge employer and contributes significantly to the country’s gross domestic product, it is still beset by several challenges. These include the fact that most enterprises survive just three years, while over 40 per cent of unlicensed businesses are set in the open and have no permanent structures.

Another 44 per cent are in temporary or semi-permanent buildings, a fact that exposes them to such trivial inconveniences as rains. A lack of skills is also an issue in this sector, with most business owners and employees lacking a college education. The most common mode of skills acquisition in the sector is via apprenticeship

A major problem facing the Jua kali industry almost everywhere in Kenya is the constant fire outbreaks destroying merchandise worth millions of shillings. Nairobi’s Gikomba has had a fair share of these fires. Jua kali workers also endure harassment by more well-connected, powerful business rivals.

In my opinion we cannot overemphasize the role the Jua Kali sector plays in Kenya’s development. There is a saying that production is not complete until what is produced reaches the consumer. This saying underlines the importance of market access. Many Jua Kali operators would meet the many challenges they face if they marketed their wares profitably

A budget that has incentives for market access for Jua Kali would go a long way in assisting this sector. Support for Kenyan mobile phone apps such as iCow and M-Farm are examples of how small-scale rural enterprises can benefit from improved access to information and therefore, receive better financial returns. There could be more incentives to support the sector

-Prof Bwisa teaches entrepreneurship at JKUAT