6 December 2012

Kenya: Corruption Killing Job Creation in Kenya, Says New World Bank Report

Photo: Lauren Everett/AllAfrica
Corruption report box in Kenya.

Corruption accounts for loss of resources enough to create 250,000 jobs in Kenya annually, the World Bank has said.

In its latest economic update titled 'Kenya at Work', the report says an enterprise survey found out that firms pay up to 12 per cent of value of government contracts to win them and four per cent value of their sales is directed towards bribe payment.

Total kickbacks paid on government contracts are approximated at Sh36 billion and another Sh69 billion is paid in form other related bribes.

"Kenya stands out for it's business related corruption than any other country in the world," the report says.

Currently only about 50,000 out of an estimated 800,000 youths leaving school annually get employment.

"Nepotism, tribalism, sexual harassment and corruption determine who gets these jobs leaving the rest to find their own means of survival," said World Bank country director Johannes Zutt.

Zutt said in Kenya the main barriers to creation of jobs through investments are corruption, access to electricity, and poor infrastructure. The World Bank downgraded its earlier prediction of a 5 per cent GDP growth for Kenya to 4.3 per cent, one per cent lower that 2011, but maintained its 2013 projection at 5 per cent.

The report shows Kenya's economy is stable but vulnerable due to the expected general election shocks, transition to a new governance system and the Euro crisis.

"Kenya's economy is out of balance and the external position has become even more vulnerable as the country's current account deficit has skyrocketed and could reach 15 per cent of GDP in 2012," the survey notes "This is among the worst external balances in the world and poses a significant risk to Kenya's economic stability."

Kenya's growth remains below the African average and substantially below that of its East Africa Community partners with an average of 6 per cent annual growth.

Over the last decade, Kenya's imports have grown faster than its exports since mid-2011, with earnings from top four exports not enough to pay for oil imports.

The survey recommends that Kenya should increase its manufacturing capacity and help the high number of people leaving family farming activities to create agricultural processing for export, in order to increase employment opportunities.

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