Kenya’s rising unemployment crisis demands immediate attention. With the number of unemployed youth aged between 20 and 34 increasing from 1.85 million in 2019 to 3.12 million in 2022, as per the Kenya National Bureau of Statistics Economic Survey 2023, the situation is alarming. But there’s hope in the form of cooperatives.
Credit unions in America and Scandinavian countries have shown how cooperatives can create employment opportunities. Kenya’s vibrant cooperative sector is ranked 7th globally and 1st in Africa, making it well-placed to tackle the issue.
Cooperatives in Kenya have issued loans worth Ksh980 billion to their 14 million members by the end of 2022. This is a significant amount that can effectively address the unemployment crisis. Cooperatives have an asset base of Ksh1.5 trillion and a deposit portfolio of Ksh1 trillion, giving them the financial muscle to take on the challenge.
Cooperatives’ business model is resilient and can thrive over the long haul, as demonstrated during the Covid-19 period. They also prioritize education, training, and information as a fifth principle of the cooperative principle. Financial literacy equips members with the knowledge to run and expand a business, leading to economic growth.
Trust is crucial in cooperatives as it establishes partnerships and raises enough capital to engage in various businesses such as transport, manufacturing, and farming. Saccos, for instance, have succeeded in developing office space, and the rental income is shared among members in the form of dividends. This model can be extended to other sectors of the economy as well.
The Cooperatives and Employment: a global report by the International Organisation of Industrial and Service Cooperatives establishes that employment and unemployment patterns are directly linked to growing levels of poverty, exclusion, and economic desertification of depressed regions. Cooperative enterprises respond directly to the needs of their members, born out of crisis situations. Young people can benefit from joining associations as they help overcome significant structural and psychological barriers.
Kenya’s cooperative sector is a valuable resource that can effectively address the unemployment crisis. It’s time to recognize the potential of cooperatives and leverage them to create more employment opportunities.
