Discussion Paper No. 70 of 2007 on Skills Needs, Availability and Competitiveness: A Case for Kenya

Abstract

Kenya has put a lot of emphasis on human capital development as a way of facilitating economic growth. The link between human capital (skills) and growth is through high productivity and improved competitiveness. This study is motivated by the fact that in Kenya, there seems to be a mismatch between the available skills and the skills requirements of firms. The study examines the relationship between skills and competitiveness and the implications of the association both at macro and firm level. The key findings of the study are: (i) there exists a mismatch between firms' skills needs and the skills available in the labour market; (ii) there is limited linkage between industries and training institutions; (iii) there exists institutionalized on-the-job tmining programmes in various firms that provide company-specific and general skills to employees. Other findings are that skills availability,foreign direct investment, improvement in macroeconomic performance, investment in secondary and tertiary education ( especially in technical courses such as engineering) significantly contribute to a country's competitiveness. Various initiatives targeted at improving the availability of skills at firm level, including increasing collaboration between tertiary institutions and industry, should be initiated and encouraged. Such initiatives should include diversification of skills to meet the existing demand, and increased investment in secondary and tertiary institutions that offer science and technical subjects.