Nairobi, Machakos and Central Kenya counties are the leading generators of quality formal jobs while consigning far-flung counties in North Eastern to low-paying work, a new World Bank report shows.
With the services sector replacing industries as the new source of well-paying jobs in urban areas such as Nairobi, neighbouring counties have emerged as the biggest beneficiaries of the shift to high-skilled services such as ICT, health, real estate and education.
Other regions, mostly those in North Eastern, the report says, have not been able to reap the benefit of the boom in the service sector which has been epitomised by the growth in financial technology as the ‘Silicon Savannah’ takes shape in Nairobi.
Several official reports have shown that low-paying jobs in some counties have a direct relation to high poverty rates published by the Kenya National Bureau of Statistics (KNBS) in several studies.
“The Central region may have experienced faster transformation due to favourable agronomic conditions, as well as proximity to Nairobi and better infrastructure, which provides access to a larger market,” the report explains.
“The change in the Eastern region is driven by a few counties (Makueni, Kitui, Tharaka Nithi) that are connected either to the Central region or to Nairobi,” the report added.
The Central region includes mostly the former Central Province which consists of Kiambu, Nyandarua, Murang’a and Kirinyaga counties. In some contexts, Central extends to Laikipia and Meru counties.
Because of its high altitude, Central is a lot cooler than the rest of Kenya and has fertile soils and a lot of rainfall, making it highly productive.
Together, the four counties of the Central region contribute 12.5 percent of the Kenyan GDP, official data shows. Besides urban counties such as Mombasa, the working-age population in other countries does not enjoy high-quality jobs as they don’t have industries or developed services sectors.
“Some 82 percent of those employed in Nairobi and 73 percent in Mombasa work in services. In contrast, there is a high concentration of agricultural employment in counties outside the Central and Eastern regions. Notably, in 12 of Kenya’s 47 counties, over two-thirds of employed individuals work in agriculture,” said the World Bank.
The 12 counties are Wajir (70 percent), West Pokot (67 percent), Busia (67 percent), Mandera (65 percent), Kisii (64 percent), Narok (59 percent), Makueni (54 percent), Homa Bay (53 percent), and Samburu (51 percent).
With the share of employment in industry stagnating, Kenya has a higher reliance on agricultural sector employment compared with the lower-middle-income country average, as well as its structural and aspirational peers. The report defines structural peers as countries with similar structural characteristics as Kenya— Ghana and South Africa.
Aspirational peers are countries similar to Kenya that have a higher GDP per capita. They include Bangladesh, Indonesia, Malaysia, Sri Lanka, Thailand, and Vietnam.
Last year, Kenya’s economy grew by 5.6 percent thanks to a rebound in agriculture that benefited from favourable weather, an annual survey by KNBS shows.
Agriculture —which contributes slightly more than a fifth of the GDP — grew by seven percent last year, creating more jobs as the business of growing crops and raising animals thrived.
Although agriculture was the largest employer, it, however, paid poorly, reflecting the subsistence nature of the sector responsible for the high poverty levels in rural Kenya.
The report shows Kenya experienced major sectoral shifts between 2006 and 2016, with a large share of employment transitioning out of agriculture and mostly into lower-productive services.
Manufacturing, which also tends to generate quality jobs, has stagnated and the escape from farms to urban areas has not always brought prosperity to the millions of job seekers.
“The services sector has grown in importance, and dominates the economy, contributing 54 percent of value-added and 45 percent of jobs. On the one hand, the services sector consists of low-productivity subsectors, such as small-scale retail and personal services, which have been growing rapidly but often do not provide good earning opportunities.
“On the other hand, some services—including information and communication technology (ICT) and other high-skilled services— offer the most productive opportunities on average.”
Education, health, ICT and real estate are some of the highest-paying areas in the services sector. The economy last year added 122,900 formal jobs, or a growth of 4.1 percent, to 3.13 million jobs.
Last year, more than 80 percent of working-age Kenyans, or 16.68 million, were employed in the informal sector where the earnings are largely low and erratic and there is no job security. Wholesale and retail trade, hotels and restaurants are the biggest informal employer with 9.7 million workers in 2023.
The number of wage employees in the public sector increased by 54,900, or 5.85 percent, which is a six-year high, reflecting increased recruitment of tutors by the Teachers Service Commission.
However, barring the pandemic period, formal jobs in the private sector grew by 3.27 percent, the slowest growth since 2019, reflecting a softening on investment and consumption by firms and businesses which also grappled with increased taxation that took effect in June 2023.