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New financing model forces students into cheaper courses

Kenya’s tertiary education sector is struggling and has failed to produce many skilled graduates who could get well-paid jobs within the country’s formal sector, resulting in an uptick of unemployed and discouraged graduates in recent years, according to a new World Bank report.

The new report, Jobs for All – Unlocking Inclusive Growth in Kenya: Kenya jobs diagnostic, says that, while unemployment has declined in the country among other groups, it has not for graduates.

To reverse the situation, the World Bank has called on the Kenyan government to create a favourable environment for higher education to drive innovation that would help to increase skilled workers.

The report stresses that, in Kenya, there is currently a mismatch between the supply of skilled workers and suitable job opportunities, a scenario that can lead not just to unemployment and poverty, but also to social unrest.

“Gender disparities also continue to exist in the labour market, with women earning less than men and facing challenges in terms of labour force participation and quality of jobs,” the report states.

More graduates stop looking for jobs

In this regard, the college-to-work transition has been difficult for graduates, as most of the jobs generated within Kenya’s economy are in the informal sector, especially in the low-skilled segments of agriculture and retail business. For instance, in 2023, the informal sector created 85% of all the new jobs, according to Dr Macdonald George Obudho, the director general of the Kenya National Bureau of Statistics.

So far, the lack of suitable jobs appears to have discouraged some university graduates from looking for jobs, especially in the rural areas where most people are self-employed or are engaged in unpaid family enterprises. In this context, the number of university graduates who have stopped searching for jobs even though they want to work, has increased steadily over the years.

The issue is that, whereas Kenya has made progress in providing tertiary education, most of the graduates lack job market skills, as about 80% are enrolled in non-science and technical programmes. Even those who graduate with technical degrees and diplomas have few skills, the report points out.

The World Bank suggests that Kenya should increase its share of science, technology, engineering, and mathematics, or STEM, graduates to the level of countries such as Malaysia and the Philippines, whose shares of such cadres completing tertiary education are almost double those of Kenya. Although there have been efforts to increase enrolment in STEM-related courses, the report notes that those initiatives are too small to meet the needs of Kenya’s expanding economy.

MSMEs create jobs, but lack capacity

To avoid creating unemployable university graduates, the World Bank advises Kenya’s government to develop sound economic policies to support micro, small and medium enterprises, or MSMEs, as well as improving agriculture. The issue is that, whereas knowledge capital is necessary for the growth of different economy subsectors, many MSMEs have no infrastructure or capacity to attract graduates.

In this regard, the report highlights that Kenya’s economy is not on track to produce many higher quality jobs for tertiary education graduates, since most labour force workers are likely to enter low-productivity agriculture or services sector jobs that are not dynamically productive.

Whereas, most MSMEs in Kenya report the need for managerial skills in financial and record-keeping, marketing, and customer care, they rarely cite their technical needs. Even then, the report notes that the government’s job programmes are not comprehensive, as they typically address only a few constraints individuals and firms in the country face.

Subsequently, many workers entering the labour market in Kenya lack foundational skills, which need to be addressed at earlier stages in basic education. For instance, employers identify workers’ inability to handle computers for work-related tasks as one of the significant skills gaps among white-collar workers in Kenya. This includes some university graduates. Sadly, the fact that some graduates do not have jobs is often an indication that they lack basic skills in their occupation, the report states.

Affordability dictates choices

However, to improve the situation, the World Bank recommends policies and reforms to equip Kenya’s fast-growing labour force with the advanced skills needed in a transforming middle-income economy. Unfortunately, the harsh reality is that more public investments in technical university education and technical and vocational education and training, or TVET, will not be coming soon.

The issue is that the university financing model for university education that was introduced in 2023 based on an assessment of families’ ability to pay fees for their children, is not working as expected. Students now choose programmes that they can afford and not what they qualify for or aspired to study.

Statistics from the Kenya Universities and Colleges Central Placement Service indicated that, while 134,733 students were placed in public universities from the cohort that sat for the Kenya Certificate of Secondary Education last year, 47,872 students did not choose any degree course. Of those, 11,991 opted for diploma courses, while the other 35,881 selected students were not accounted for.

Currently, many students are taking advantage of the inter-university transfer or inter-faculty transfer, two openings which allow changing universities or faculties, mostly based, not on the prestige of the university or a degree a student may aspire to study, but on the criteria of cost and affordability.

Concerned about the situation, the parliamentary committee on education ordered the ministry of education on 4 June 2024 to withdraw admission letters of students expected to join public universities in August until the exact amount of fees the students are expected to pay has been established. The committee is worried that about 20,000 students did not join the university because of the inefficiency of the new financing model.

In effect, the letters that are expected to be withdrawn only indicate the cost of the degree programmes, not how much a student would get in the form of scholarships or loans. The annual tuition fees range from KES144,000 (about US$1,113) to about KES760,000 (about US$5,876) while expenses for accommodation, upkeep and transport are not included.

Too many low-skilled workers

The World Bank has warned that social and economic barriers to education are impacting on Kenya’s inability to improve the quality of its labour force. “Poverty and the high cost of schooling present serious obstacles towards access to higher education, especially to women,” the report states.

However, the report says there are no short cuts to development and, if Kenya wants to become a middle-income country, various structural changes will have to be implemented within its economy. More so, job-relevant skills of workers must be advanced.

The World Bank suggests the share of low-skilled workers in agriculture, personal and retail services should be reduced. The country should move towards adding value to agricultural commodities through manufacturing processes. In this regard, Kenya should strive towards scaling up skills in modern crop and livestock production by training new categories of workers or reskilling those already working.

According to the African Development Bank (AfDB), most workers in African economies have mainly worked in traditional sectors such as agriculture, travel, transport and other low-skilled services. But, to accelerate growth and create well-paid jobs, AfDB in its report, African Economic Outlook 2024: Driving Africa’s Transformation: The reform of the global financial architecture, states that African countries should capitalise on the emerging high-value services and manufacturing of goods.

Such a development model would not only promote the creation of suitable jobs, but would also ensure that African countries catch up with high-performing developing countries in other regions. What that means for Kenya is that there is an urgent need to create good jobs in the off-farm segment of agriculture, particularly in food production and in modern agricultural value chains.

Changing world brings jobs shift

As income and urbanisation increase, the report predicts there will be a shift toward jobs in agro-processing and services related to food systems, such as packaging, distribution and commercialisation. Other suitable jobs, the World Bank says, would eventually be created in financial services, real estate, information and communication technology and other professional services.

To enhance the process, the report suggests that universities and TVETs should establish apprenticeships and internships as well as facilitate frequent interaction with employers as a way of providing their students with work-based skills. The challenge of building the skills that Kenya needs will not be so easy, as it rests with tertiary institutions that are currently struggling to provide quality education where students choose courses to ease the cost of higher education.