This archive report was first published on 9 August 2019.
Published on August 9, 2019, Nairobi — The past week has seen a significant number of job losses in Kenya, with more than 1,000 people laid off by three major companies.
The companies, Telkom Kenya, Stanbic Bank, and East African Portland Cement (EAPCC), have cited different reasons for the layoffs, but cost-cutting is a common thread.
On August 7, 2019, Telkom Kenya announced it would be firing 575 employees due to redundancy. Stanbic Bank followed suit on August 7, 2019, stating it would let go of 255 workers to reduce costs. EAPCC, a loss-making cement manufacturer, announced it would be laying off all its employees as part of a restructuring plan aimed at saving the company from further losses.
According to Gerald Muriuki, an analyst at Genghis Capital, the lack of access to credit and automation are major factors contributing to the job losses.
"The capping of bank interest rates, which took effect almost two years ago, has led to a reduction in the number of loans given to companies, affecting their profitability and resulting in job losses," Muriuki said.
He cited EA Portland's revenue decline by 18% in December 2018, which it attributed to slow market uptake due to the prolonged election period and the negative impact of interest rates capping on its revenues.
Automation of company processes is also a significant factor, with Muriuki stating that many companies are being forced to reduce their workforce due to the adoption of technology replacing human labor.
"The manufacturing and banking sectors are being heavily affected, and more jobs will be lost, especially in the banking sector, as banks embrace agency banking and automated systems," he added.
