Kenya has the largest economy in the East African region, and is among the fastest growing economies in the world. The Kenyan economy grew by 5.8 percent in 2018, a point higher than the 4.8 percentage growth it recorded in 2017. However, that does not mean anything to a person who has no money in their pockets.
To illuminate how bad the crisis is, the Central Bank of Kenya data 2019 shows that the number of Kenyans who have KES 100,000 or more in their savings accounts reduced for the first time since 2006. They make up 97 percent of account holders. Only 1,450,000 bankable Kenyans have more than that amount from the 1,583,000 in 2017. This is despite the number of bank accounts growing by 13.4 percent in the same period.
There are 53.83 million bank accounts in Kenya now, but most of the active accounts are probably held by individuals and corporates that have more than two accounts. Many Kenyans prefer to use the mobile money transfer services MPESA, Airtel Money and TKash which they use as their banks. The Global Findex Database showed 75 percent of Kenyans or 8 out of every 10 adult Kenyans is banked either through mobile banking or traditional banking. The research shows Kenya’s banked population ranks higher than South Africa (70 percent), Nigeria (44 percent), and Ghana (40 percent), and above the global average of 62 percent.
Despite Kenya having the highest banked population, the situation of the account holders is dire. It is no rocket science, there is very little money in circulation.
Job creation rate in Kenya
Economic Survey 2019 data shows that only 78,400 new formal jobs were created in Kenya in 2018. This was a drop from the 114,400 created in 2017.
In 2019, there have been massive job cuts and company closure instead of job creation. While the private sector has been hard hit, the government hiring rate is at a snail’s pace.
Data from the Registrar of Companies shows that 388 companies have been dissolved in the last six months. 95 companies were shut down in September, 100 in July, 90 in May and 103 in March. Several other businesses have applied for deregistration by the end of the year.
The numbers of business that are closing are alarming and cut across several sectors. The ownership is also varied from family owned firms, sole proprietorships, partnerships, to local subsidiaries of multinational businesses.
In the last two years, there have been hundreds of job losses in the private sector. Major companies in all fields from banking to manufacturing have been laying off workers. Such companies include East Africa Breweries Ltd, National Bank, Stanbic Bank, East African Portland Cement, Barclays Bank Kenya, among others.
More job losses are expected as the businesses close, while the number of trained job seekers continue to flood the market. The private sector jobs that open up will become more competitive. It has been noted severally how overqualified people apply for jobs such as cashiers in supermarkets and graduate trainees. The government is also concerned that it will miss its revenue targets, again.
How is the NSE performing?
More than 15 of the 62 companies listed on the NSE reported net income drops by at least 25 per cent last year compared with 2017. Several companies have also issued profit warnings this year 2019.