NAIROBI, Kenya, May 14 – Nearly 30 percent of all companies across the country will be laying off staff in an effort to mitigate the impact of the global economic crisis.
Federation of Kenya Employers’ (FKE) Executive Director Jacqueline Mugo said on Thursday that the most affected industries were construction, floriculture and the tourism sector.
She stressed the need for the government and private sector to explore ways of catering for employees who have been laid off due to the crisis.
“There are many interventions that can be put in place. One of them is looking at people who have lost jobs and looking at ways of giving them new skills so that they can get new and sustainable jobs,” said Mrs Mugo.
Speaking at the same time, FKE Chairman Patrick Obath pointed out the need for African countries to brace themselves for the second wave of the financial crisis.
“The second wave is characterised by issues around the remittance of foreign money into Africa from the Diaspora. The issue of tourists coming to Africa is also beginning to have an impact as people have less spendable income,” he stated.
“The traditional markets from Africa and Kenya in particular are also beginning to shrink as people have less money to buy.”
Mr Obath said that when the international financial crisis began, it was thought that Africa would be spared the consequences since it was not fully integrated into the global financial system.
He said that African financial institutions were also thought not to have engaged in risky undertakings like their counterparts in developed economies.
He stated that this has proved wrong as more and more African countries are seeing a considerable drop in revenues.
Mr Obath went further to outline the effects of the financial recession on African economies.
He said that it has seen the contraction of those economies dependent on raw materials as a result of the commodity bubble. He gave the example of the Democratic Republic of Congo, which has announced that it will cut its budget by a quarter in 2009, due to lower than expected mining revenues.
He pointed out that access to capital and investments are drying up as foreign earnings continue to decline.
“Despite many assurances to the contrary, development finance both lateral and multilateral will be affected by the huge stimulus packages being adopted by developed economies.”
He also said that the number of tourists from the developed world visiting Africa this year is also expected to go down.
The FKE Executive Director stated that other than job losses taking place in the country, the level of poverty in Kenya will also increase.
She was speaking ahead of a forum scheduled for next week seeking to reduce the impact of the global financial crisis.
“Key points in the forum will be the discussion of the global economic slowdown on African economies and looking at initiatives which can be used to mitigate the impact of the economic slowdown on companies particularly SMEs in the continent.”
Ways to ensure skills development, employability, retooling and re-skilling redundant workers for newer and sustainable jobs will also be discussed in the forum.