Kenya’s vibrant informal sector emerged as the primary driver of job creation in 2023, accounting for a staggering 85% of the new employment opportunities, according to the Economic Survey 2024 released by the Kenya National Bureau of Statistics (KNBS).
The comprehensive report, which provides a detailed analysis of the country’s economic performance, revealed that the informal sector generated 720,900 new jobs out of the total 848,200 jobs created nationwide. This remarkable contribution highlights the critical role played by small-scale businesses, entrepreneurs, and self-employed individuals in sustaining Kenya’s economic growth and fostering employment.
“The informal sector created 720,900 thousand new jobs and accounted for 85.0 per cent of all the new jobs created in 2023,” the report states, underscoring the sector’s significance in the country’s labor market.
Despite this substantial job creation, the survey also highlighted a concerning trend – the widening gap between wage earnings in the formal and informal sectors. According to the data, nominal average earnings in the modern sector per person increased from KES 864,750.1 per annum in 2022 to KES 888,743.5 per annum in 2023, representing a modest 2.8% rise. Conversely, the informal sector witnessed a more substantial increase of 5.2% in nominal average earnings, albeit from a lower base.
“The nominal wage bill rose by 7.0 per cent from KES 2,607.6 billion in 2022 to KES 2,789.3 billion in 2023,” the report noted, indicating a growth in overall wage payments across both sectors.
| Key Fact | Data |
|---|---|
| New Jobs Created in 2023 | 848,200 |
| Jobs Created by Informal Sector | 720,900 (85% of total) |
| Average Annual Earnings in Modern Sector 2023 | KES 888,743.5 |
| Growth in Modern Sector Earnings 2022-2023 | 2.8% |
| Growth in Informal Sector Earnings 2022-2023 | 5.2% |
| Total Nominal Wage Bill Growth 2022-2023 | 7.0% |
| Major Informal Job Creating Sectors | Wholesale/Retail Trade, Hotels, Restaurants Community, Social & Personal Services |
| Concerns Raised | Widening Wage Gap Income Inequality Limited Upward Mobility |
| Suggested Government Initiatives | Affordable Credit for SMEs Infrastructure Development Vocational Training Programs |
The report also delved into the specific industries that contributed significantly to job creation within the informal sector. The wholesale and retail trade, hotels, and restaurants sector emerged as a major contributor, generating 391,800 new jobs, closely followed by the community, social, and personal services sector, which added 151,000 new positions.
“Employment in Accommodation and food service activities increased by 27.8 per cent primarily due to increased international arrivals and domestic tourism, which resulted to higher hotel bed occupancy rates in the review period,” the survey stated, highlighting the link between the tourism industry’s performance and job growth in the informal sector.
The report also shed light on the government’s efforts to support the informal sector and promote employment opportunities. The Teachers Service Commission, the largest employer in the public sector, registered the highest growth of 12.0 per cent in wage employment, followed by employment in Ministries and other Extra-budgetary institutions, which grew by 3.4 per cent.
“Employment in County governments increased by 1.9 per cent in 2023, lower than 4.4 per cent increase recorded in 2022,” the report noted, indicating a slower pace of job creation at the local government level.
Government initiatives aimed at supporting small and medium enterprises (SMEs) and promoting entrepreneurship have been lauded as critical steps towards fostering a more inclusive and sustainable economic environment.
