Low Number of STEM Graduates From Local Universities Lags Kenya Behind Other Economies – Kenya Economic Update Reports
According to the World Bank, the low number of science and engineering graduates from local universities is a major factor in Kenyan start-ups’ inability to scale up.
According to data from the Commission for University Education (CUE), education had the highest number of bachelor’s degree graduates in 2017/18 (26%) followed by business, administration, and law (25 per cent).
Meanwhile, only 12% of graduates had majored in science, technology, engineering, or mathematics (STEM).
At the PhD level, business administration and law received the most doctorates (33%), followed by education (19%), STEM courses (13%), and other academic fields (35 per cent).
According to the World Bank in a new report, Kenya Economic Update: From Recovery to Better Jobs, while many companies are formed in Kenya, they appear to be less capable of scaling up, limiting job creation.
It observes that the majority of businesses in Kenya are small, primarily based in Nairobi, and operate in the informal sector.
The lack of qualified science graduates has reduced the pool of workers, researchers, and experts available to Kenyan start-ups for knowledge, and the country also lags behind its peers in technology.
According to the report, on supply factors, Kenya has fewer people accessing the internet compared to peers and a lower share of graduates in science and engineering.
There is also a significant knowledge capital gap between Kenya and its leading peers, i.e., the supply of researchers and the quality of top universities.
Kenyan firms also lack access to physical capital and infrastructure, and the country’s internal market is small in comparison to other middle-income countries.
Businesses find it difficult to obtain financing, and Kenya has a weak regulatory framework in comparison to other economies.
In terms of demand, Kenyan entrepreneurs face a smaller internal market than other MICs (middle-income countries). Kenya has good management quality, but it lags behind in technological capabilities according to the report.
Kenya has more than 138,000 formal establishments and 7.4 million micro, small, and medium-sized businesses (MSMEs). Only 3% of formal firms have 50 or more employees, and only 1% have 150 or more employees.
To scale up firms and create new jobs, the World Bank recommends lowering trade barriers, particularly in the services sector, expanding access to digital technologies, and improving training and skill development.
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“Improving conditions in Kenya to support the ability of new firms to scale up and innovate is important to support the creation of better jobs at a large scale,” said Keith Hansen, World Bank country director for Kenya.
When firms reach a critical mass and are able to access larger markets, the report recommends using technology and expanding exports to increase productivity, higher-quality jobs, and higher living standards for large segments of the population.