Market disruption and job losses are largely to blame for the current hard times. PHOTO | SHUTTERSTOCK The number of workers laid off by Nairobi Securities Exchange (NSE)-listed firms more than doubled to 7,000 last year on falling revenues, latest data shows, signifying the depth of the crisis in the jobs market which has worsened since the second quarter of this year due to the Covid-19 pandemic.
The size of lay-offs by NSE firms in 2019 represents a 143.39 percent jump compared to the previous year when the companies shed 2,876 jobs. Companies listed on the bourse cut 1,870 jobs in 2017.
“Declining profitability combined with falling revenues in 2019, saw a number of these firms resort to downsizing staff with over 7,000 staff laid off in 2019 compared to 2,876 in 2018 and 1870 in 2017,” the Central Bank of Kenya (CBK) says in an update released yesterday.
The disclosure paints a grim image of the jobs market which has plunged into further turmoil since March this year when the country reported its first case of Covid-19, triggering lockdowns that saw businesses either reduce operations or shut down altogether.
Data by the Kenya National Bureau of Statistics (KNBS) shows that about 1.72 million people lost jobs between April and June, mainly on the economic fallout of Covid-19.
The job cuts by NSE firms in 2019 came in the wake of multiple profit warnings due harsh economic times.
Seventeen companies or more than a third of all NSE firms issued profit warnings as net earnings tumbled by over 25 percent, prompting them to initiate lay-offs to manage expenditures.
In 2016, 11 firms issued profit warnings. The average earnings per share for select listed firms also declined from Sh7.2 in 2018 to Sh2.1 in 2019, hence a further decline in equity prices.
“Declining revenues and profitability for firms and furloughs of employees increase credit risks as those with outstanding debt will be unable to service them, hence a financial stability concern,” the CBK said in its newly released financial sector stability report.
The dwindling fortunes of NSE firms shine a spotlight on the health of the Kenyan business environment, even as the World Bank Ease of Doing Business index showed Kenya rose five places to rank 56 out of 190 in the world and third in Africa.
CBK governor Patrick Njoroge in October last year faulted the structure of Kenya’s economy for delivering economic growth without creating jobs or adding […]