Should We Have A “Uwezo Fund” For Mid Sized Businesses?

It is useful to consider the difficult choices that may be made to ensure that there is meaningful job creation as an alternative merely throwing money at a problem despite good intentions. Two factors determine the employment picture in Kenya, and new policy approaches are required around these because the mere push of funds into the hands of youth and selected entrepreneurs will not work.

The first issue is that employment creation is not as much a problem as the character of jobs. Adopting a very general definition of employment, it is clear that opportunities for earning incomes in Kenya are not scarce. The primary problem is that the most open opportunities are highly competitive and exist primarily in the informal sector.

As a result, many working people in Kenya receive insufficient income from work. The trick therefore is to find work that will pay substantial incomes. The Uwezo Fund and all others merely add numbers to those competing in the informal sector, meaning that incomes are unlikely to rise there.

Secondly, Kenya has a dual strand of private enterprises. Leading employment creators in the private sector are larger and more capital intensive that the rest. The largest firms in Kenya tend to have large capital endowments, international connections and markets. The total employment that they provide is important but is low, relative to the total labor force in Kenya.

At the other extreme are very small enterprises run by an individual or a duo whose labour productivity is low. Between these extremes is the missing middle. Identification and nurture of mid-size firms is indispensable for employment creation in Kenya.