Kenya could double the number of formal jobs for the youth every year through a generous increase in spending on infrastructure and heavily subsidised loans to the poor, a UN report says.

The report, presented by a think tank associated with the United Nations Development Programme (UNDP), says the country could easily start generating 700,000 formal jobs if it increased its spending on new roads, ports, airports and other public infrastructure by Sh50 billion.

To guarantee that the poor can access credit, the report proposes that the Government creates a pool of subsidised loans for commercial banks to extend to microfinance enterprises.

“But this pool should not account for more than Sh9 billion or five per cent of the national budget, even as lenders assume a 30 per cent default rate,” says Robert Pollin, one of the authors.

The report, which also proposes a deep pay cut for formal sector employees to enable employers take in more workers, says that even as Kenya grapples with a more than 10 per cent unemployment rate, at least half of the working population lives in poverty.

According to the UNDP, an average formal private sector worker now supports one other person if they live in an urban area, and 1.3 other people if they live in a rural area.

This means that for the urban worker and his or her one dependant, the one wage on which the two people live puts them near the poverty line — especially in an environment of rising inflation. The report, which as the battle for presidency approaches its peak, is expected to add impetus on the rise of employment as a key election point this year.

All the three presidential contenders Mwai Kibaki of Party of National Unity (PNU), Raila Odinga of ODM and ODM-Kenya’s Kalonzo have promised to deal with employment if elected in the December 27 poll.

While Mr Musyoka has promised to transform Kenya into a 24-hour economy to increase job opportunities for the youth, Mr Odinga plans to direct more funds to build roads, modernize the railway network, set up power generation plants, establish a free port in Mombasa and upgrade airports across the country, all meant to create more employment.

In the PNU manifesto launched on Saturday, President Kibaki promises to build one million stalls, double investment in infrastructure to Sh100 billion as well as increase economic growth to 10 per cent, as part of his efforts to create more job opportunities.

The report, co-authored by three University of Massachusetts — Amherst researchers, Professors Robert Pollin, Mwangi wa Githinji, a Kenyan, and James Heintz — says Kenya’s economy has 50 per cent of the labour force in agricultural self-employment, 36 per cent in informal sector, and 14 per cent in the formal sector.

“Rise in the formal employment by only 25 per cent should generate Sh50 billion to finance the extra infrastructural budget,” says the report.

This, the report says doubling the investment on infrastructure will not only lower the costs businesses face in hiring more workers but also increase the flexibility of the Kenyan formal labour market.

Budgets for the water and road development in the current financial year total Sh70 billion, meaning if the proposal by UNDP was to be adopted, the Government would have to almost double the vote.

The report further says that the Government should still maintain its current level of borrowing instead of cutting it, arguing that countries with higher domestic debt to GDP levels were performing better.

According to the Monthly Economic Review, the level of domestic debt stood at 410 billion in September.

The three researchers reckon that over the past decade, employment growth in Kenya’s formal sector has been substantially weaker than in the informal sector.
This is because businesses in the formal sector will not hire more workers since they are convinced that the costs of doing so will exceed the benefits.

“They, therefore, choose either to maintain their operations at a lower level than they would if the benefits of hiring more workers exceeded the costs; or increase the use of machines in their operations as a substitute for employing workers as their preferred means of expanding their operations,” says Prof Pollin

Prof Pollin says as the population in Kenya grows, new labour market entrants are primarily moving from the rural areas into the urban informal sector.
Recent Ministry of Labour statistics indicate that the total labour force — including all people employed and unemployed — totalled 13.5 million.

Written by Mwaura Kimani

Once again, the country is caught up up in the middle of a vigorous debate on the thorny issue of a centralised authoritarian state, where immense power is vested in the presidency, versus a devolved governance system that would ensure that power is shared between the national government, regional and community level governance structures.
In the process of this enlightening debate a number of political half truths and myths about the effects of a devolved system of government have come up. For the sake of a balanced understanding of the issues at hand, it is important that some of these myths be exposed.
Myth 1: A devolved system will lead to increased ethnic tensions.
The solution to Kenya’s growing incidence of negative ethnicity lies in politically, culturally and economically empowered communities. The day Kenyans will realise that they have equal access to opportunities is the day hatred against one another will be banished.
It is the lingering perception by some groups that others have an unfair access to the nation’s economic resources that is the core cause of ethnic animosity.
Indeed, most cases of ethnic hostility and conflict have been traced to the intrigues of power-brokers at the centre who employ them as a tool to cling to the reins of power. The historical manipulation of ethnic tensions among communities in the North Rift by regimes in power, is a living testimony of how centralised power can be successfully used to condemn unsuspecting communities into a vicious circle of inter-ethnic hatred and conflict for decades.
The Moi regime, tacitly stoked the fires of conflict between different ethnic groups in the North Rift (Pokots, Turkanas, Samburus and others), simply to safeguard the interests of the President’s own Tugen community.
In the current dispensation where literally every aspect of the nation’s agenda is set and controlled in Nairobi, it is virtually unthinkable for the voice of nationalities at the periphery, such as the Gabra, Boni, Malakote and Rendille, to be heard at the national level.
It must be remembered that, it is through the adoption of a system of devolved system that longstanding ethnic tensions and conflicts between the Zulus, Xhosas and other communities in South Africa were resolved.
Prior to that, the Boers had mastered the art of divide and rule by planting seeds of discord between various indigenous African nationalities. The moment each of South Africa’s nationalities were given equal opportunity, strong feelings of animosity between them dried up.
Myth 2: A devolved system of governance will undermine economic productivity.
A system that devolves power and gives (an appreciable degree of) autonomy to regions and communities to preside over their economic and social affairs will free the huge potential locked up in the nation’s cultures, social economies and natural resources. It must be noted that the current centralised system was designed by the colonialist to maximise control and dominion over our resources and people.
The colonial government deliberately barred indigenous African citizens from participating in highly lucrative sectors of the economy such as mining. Indigenous productive skills such as iron smelting (metallurgy), cosmetology and jewellery were deliberately discouraged to undermine the ability of African communities to create wealth and take charge of their own economic affairs.
This strategy was tacitly adopted by the African ruling class after independence, to ensure that only a small bunch of them and their kin had full access to the knowledge and resources required to exploit the nation’s wealth. The Kenyatta and Moi regimes advanced this practice to such an absurd level that the nation’s most potential regions such as the coast and Lake Victoria region were left to wallow in poverty.
Myth 3: A devolved system of governance is too expensive to maintain.
On the contrary, a well-planned devolved system will enhance efficiency in the use of scarce national resources. The immense resources currently employed to maintain and support the non-performing bureaucracy of chiefs, DOs, DCs and PCs would have been deployed in supporting a people driven governance framework. The cost of the centralised corrupt bureaucracy to Kenya’s social development and economic advancement over the past four decades is incalculable. This system is the principal factor behind most failed development programmes at all levels.
In a devolved arrangement development resources would directly be channelled to the either to the district, constituency or location level of government. Highly qualified personnel now bunched up at ministry and provincial headquarters would be redeployed to directly serve communities at constituency, location and sub-location levels
By AWORI ACHOKA

Nairobi has been rated among the world’s 25 fastest growing large cities, signalling that failure to plan may aggravate urban problems such as the rise of slums.



London-based International Institute for Environment and Development (IIED) indicates that the city’s population has grown from 1.8 in 1999 to 3.5 million.



Mr Peter Kibinda, the director for city planning, said City Hall was reviewing development policies for residential areas to deal with rapid expansion of the city’s 20 zones.



Last year, pressure on existing social facilities forced the council to freeze development in some of the upmarket estates.



The IIED report also reviewed 70 per cent national censuses and found that the world’s urban map is rapidly being redrawn. A review of the global population over 50 years period, (between 1950 and 2000 ) shows that 30 cities grew more than 20-fold. The speed with which a city’s population grows is usually measured by its annual average population growth rate.



Dubbed the “million-cities”, the capitals include: Abidjan, Conakry, Faridabad, Kaduna, Karaj, Kolwezi, Las Vegas, Lusaka, Shenzhen, Ulsan and Yaounde, Dar es Salaam, Dhaka, Jeddah, Khartoum, Khulna, Kinshasa, Lagos, Nairobi, Niamey, Ouagadougou, Riyadh, Santa Cruz, Tijuana and Toluca.



The United Nations Population Fund projections indicate that more than half of the world’s population will live in urban areas by June, next year.



David Satterthwaite, a senior fellow in IIED’s human settlements group who authored the report, said Kenya’s decline in urban poverty compares favourabley with those of most countries in the region.



In Kenyan towns, 22.8 per cent of the population live below the $1 poverty line, a rank higher than Zambia’s 75.8 per cent, Nigeria’s (70.8 per cent) and Tanzania’s 57.8 per cent.



Kenya’s food poverty line-according to the 2007 Economic Survey, is estimated at consuming 2, 250 kilocalories per day per adult equivalent.



“Using this approach, the food poverty lines in monthly adult equivalent terms are Sh988 and Sh1,474 for rural and urban areas respectively.

The overall poverty lines were Sh1,562 and Sh2,913 for rural and urban areas.



Despite the progress that Kenya has made in the fight against impoverishment in the recent past, the report says the incidence of food poverty in urban areas increased from 38.3 per cent , in 1997, to 41 per cent by last December.



Of the three biggest towns, Nairobi is the least food poor, while in Nakuru and Mombasa one in two persons has below the minimum food energy requirements.



“Urban residents of Nakuru are about two and a half times more likely to be poor compared to their counterparts in Nairobi,” says the report.



Asia now has half the world’s urban population while Africa has surpassed Northern America with Europe on a steep decline.



“Most of Europe’s great centres of industry are no longer among the world’s largest cities and most of the future growth in urban areas will be in low and middle income countries, ”says the report released yesterday.



Written by Zeddy Sambu