A look at the role of informal sector in the overall economic development
The informal sector in Kenya has had rapid growth over the last ten to twenty years. The industry is currently contributing significantly towards the growth of the overall economy in a manner that not everyone expected. The commonly known sector as Jua Kali meaning the in the hot sun is a composition of small-scale traders, craftsmen and other small entrepreneurs.
A 2017 Economic Survey by the Kenya National Bureau of Statistics showed that the sector, generated 747,300 jobs, about 90% of all jobs created, while the remainder 85,600 were created by the formal sector.
“The economy has however remained resilient and the growth has been achieved by the initiatives the government has put in place, easing the cost of doing business,” Devolution and Planning CS Mwangi Kiunjuri said.
These people operate from small kiosks either built on the roadside or small single rooms. Some other people directly work under the hot sun thus the name Jua Kali.
Employment in Jua Kali
This sector mainly does not require very high formal education level, it requires high level of skill, creativity and talent. Today this industry is a higher income generating industry than formal white collar work.
The master craftsmen produce high quality goods, for less the cost of established manufacturing firms. The craftsmen’s customers include shopkeepers who stock their shops with their goods. The artisans in this industry usually have the same level of training as factory staff; therefore, they have the capability of making high-quality items similar to formal manufacturing factories.
The artisans also show a great level of sophistication and ingenuity in engineering the machines that they use to produce their items. Which proves you don’t necessarily have to purchase large, expensive machines to produce the same level of work as the large factories.
As a result of growth in the JuaKali Sector, some business opportunities have opened up. There are brokers or middlemen, who have created a business of sourcing parts and goods to sell to small and mid size enterprises.
This sector has managed to absorb people from different levels of education. It has created livelihoods for those that have manufacturing skills and artistic talent.
Future of Jua Kali
This sector has a bright future. The population growth, new technologies and creative ways of making money, will push a significant number of people to this area. However, some formal structure will be required to keep the industry afloat.
There is the need for the sector to embrace sound accounting systems, tax revenue collection system and simple payroll system. The need of proper administration is essential. If such records are in place, the entrepreneurs will access loans from banks and be able to expand their businesses. Such steps will create more employment opportunities for more people.
This sector needs very competitive and strong people to handle a challenging work environment to achieve their goals. The Jua Kali industry is an innovative platform with a bright future, like any fledgling industry, it does have its challenges which can be overcome with having a good work ethic, creativity and constantly looking for new opportunities.