Stanbic: Economy growing but cannot deliver jobs


Stanbic: Economy growing but cannot deliver jobs

In Summary

  • According to the lender’s macroeconomic output 2020, Gross Domestic Product (GDP) growth which averaged 5.5 percent in the last five years has been anchored on the weaker jobs’ outputting services segment.
  • The slug in jobs creation by the local economy is further mirrored in the slack of by key economic heads GDP contribution which in effect draws the largest footprint in job creation.
  • Doubts in job creation are seemingly set to persist with preliminary data on new jobs being indicative of the creation of 843,900 new jobs in 2019 against mass layoffs by firms which in themselves continued to bleed from an extended tough macroeconomic environment.

Stanbic Group has added to the paradox of unfelt economic output suggesting recorded growth has fallen on barren ground as it struggles to create a corresponding surge in jobs.

According to the lender’s macroeconomic output 2020, Gross Domestic Product (GDP) growth which averaged 5.5 percent in the last five years has been anchored on the weaker jobs’ outputting services segment.

“We have had various commentaries on our economy exhibiting characteristics of a recession. While the services industry has been growing, jobs in the sector fall short in their ability to industrialize the economy and overcome the middle income deficiencies,” said Stanbic Group Regional Economist Jibran Qureishi.

The illusion of economic growth without a corresponding fete in the flourishing of personal incomes is however against heavy capital deployment in the installation of supporting infrastructure projects.

While the enabling environment has been targeted at emboldening the private sector, Qureishi reckons the heavy expenditures have been carried out at the very expense of local businesses and further exacerbates concerns on project viability.

“Investments have mainly increased through external debt resulting in higher debt levels and taxes. Even so, the private sector is yet to become a dominant driver of growth,” he added.

According to data from the Kenya National Bureau of Statistics (KNBS), the Kenyan economy created 840,600 jobs in 2018 to see the number of Kenyans engaged in employment top 17.8 million people.

However, 83.6 percent of the reported jobs arose from the hard to track informal sector as formally generated roles sunk to their lowest in five years.

New jobs were further exhibited in services with electricity and gas supply, water and sewage, administration and support services leading the pack.

On the contrary, jobs in Agriculture and manufacturing barely picked up having registered an year on year growth rate of 1.6 and 1.5 percent respectively.

The slug in jobs creation by the local economy is further mirrored in the slack of by key economic heads GDP contribution which in effect draws the largest footprint in job creation.

Whilst Agriculture has picked in its contribution to GDP in the last five years, the contribution of the manufacturing sector to output has shed off 3.3 points to 7.7 percent over the period with education and finance contributions ending in a similar fate.

Doubts in job creation are seemingly set to persist with preliminary data on new jobs being indicative of the creation of 843,900 new jobs in 2019 against mass layoffs by firms which in themselves continued to bleed from an extended tough macroeconomic environment.

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Story By Kepha Muiruri
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