Kenya is facing a crisis of high unemployment, particularly among young adults who are educated and motivated to find work. The number of unemployed youth aged 20-34 has risen from 1.85 million in 2019 to 3.12 million in 2022, according to the Kenya National Bureau of Statistics Economic Survey 2023. This represents a 68% increase in youth unemployment, which poses a serious challenge to the economy. Despite the growing number of young people seeking higher education for better job prospects, the country’s unemployment crisis persists.
Credit unions in America and Scandinavian countries have been successful in owning large businesses in various sectors, including production, processing, marketing, and transportation. As a result, they have contributed significantly to creating employment opportunities, and Kenya can learn from their success. Kenya’s vibrant cooperative sector is globally ranked 7th and 1st in Africa, making it well-positioned to address the growing youth unemployment crisis.
By the end of 2022, cooperatives had issued loans worth Ksh980 billion to their more than 14 million members. This loan amount is equivalent to 26.4% of the country’s 2023/2024 budget of Ksh3.7 trillion, providing a significant financial resource to address unemployment. With an asset base of about Ksh1.5 trillion and a deposit portfolio of Ksh1 trillion, cooperatives are well-positioned to tackle the rising unemployment crisis in the country.
The cooperative business model has proven to be resilient and has thrived over the long haul, as demonstrated during the Covid-19 pandemic. In addition to issuing loans, cooperatives invest millions in education, training, and information, which is a fifth principle of the cooperative principle. This financial literacy equips members with the knowledge to run and expand their businesses successfully, contributing significantly to economic growth. Across the country, Saccos have provided vital lessons to their members, and it is time to put this knowledge into action.
Trust is a critical ingredient that binds cooperative members together, enabling them to guarantee their colleagues’ loans. This trust can lead to partnerships and the raising of sufficient capital to engage in various businesses that the economy offers, such as in transport, manufacturing, and farming. In Western and Asian economies, venture capital or angel investors are sources of funding for businesses, and with billions in loans issued annually, this can be scaled up for numerous start-ups once their potential and scalability are established.
Saccos have succeeded in developing office space, and the rental income is shared out by members in the form of dividends. This model can be extended to other sectors of the economy. According to the International Organisation of Industrial and Service Cooperatives’ global report on Cooperatives and Employment, employment and unemployment patterns are directly linked to growing levels of poverty and exclusion, as well as economic desertification of depressed regions. Cooperative enterprises, as established by the International Labour Organisation in the past, have responded directly to the needs of their members in crisis situations.
A report from neighboring Uganda found that getting young people involved in associations can help address unemployment levels. Youth associations have helped young people overcome significant structural and psychological barriers. Importantly, young people have reported greater motivation, enabling them to perform the more arduous tasks involved in unmechanised agriculture, such as clearing land for production.
