Global Recession Takes toll on Kenyan Economy
Dr Shyam S Agrawal, a CFTC Advisor based in Nairobi, analyses the effects of the economic downturn.
The Federation of Kenyan Employers in a recently completed survey of 500 companies has concluded that Kenyan workers face massive lay-offs, no salary increments and a freeze on new jobs as companies struggle to survive in a bad economy.
The survey has further concluded that 7300 workers have already been sacked and a further 6000 are expected to loose their jobs by December, 2009. It has also discovered that many companies will pay out smaller dividends to shareholders and are rescheduling their debts to stay afloat.
Over 50% of the companies which participated in the survey have agreed that their sales and turnover has gone down below expectations. High cost of fuel and transport and poor road network are considered as the major factors responsible for the economic slow down.
While the FKE has done a commendable job in undertaking the survey to assess an impact of global recession on Kenyan economy, it gives only a partial picture. The reasons for ailment of Kenyan economy are more local than the global.
Some of them include administrative red tape, corruption, land disputes, distorted labour laws, unequal distribution of wealth, inefficient infrastructure to mention a few. Kenyan Finance Minister in his recent budget speech reiterated that over 46% of Kenyan population still live on less than an income of dollar per day. The drought particularly in the rift valley has added further fuel to the fire.
An effective usage of foreign assistance, creation of strong backward and forward market linkages for the benefit of small producers, eradication of economic distortions, expansion of export basket and market diversification and well determined policy to support small and micro enterprises appears to be the lasting solution for Kenya’s economic ills.
- 1. Jul 2 2009 11:34AM, Johnah Josiah wrote:
Kenyan Employers need to style up the fact that workers are being sacked without benefits and also giving kenyans short contracts to avoid payment of Benefits to the workers. Resently Safaricom a leading mobile company anounced it's share holders meeting and shokingly unlike other companies, it was stated that the share holders will not be provided for transport and snarks. this confirms the fact that within this survey by FKE that companies have started to cut down their costs towards the share holders and also reducing dividends towards the share holders. However global ressession has not yet taken toll in kenya, i believe this caan be counterd by tightening employment rules and benefit's awarding scheme to workers being respected by employees.