Kenya’s Massive Informal Sector And Why Social Security Is Important

The coming of Covid-19 to Kenya has hit hard on the majority of Kenyans. Millions have lost their meaningful jobs and hundreds of thousands of businesses have shut down. Many people have lost hope for the future.

It is evident that Covid-19 was and is an event in history that was never anticipated. Some thought the pandemic would be a passing cloud but almost two years down the line and it is still here with us. Will the world ever recover from this pandemic?

One of the most affected sectors by the pandemic in Kenya is the informal sector. The truth is, Kenya’s economy literally thrives on the wheels of the informal sector.

According to the Kenya National Bureau of Statistics, the country has a large and burgeoning informal sector, which generated 83.6 percent of total employment in 2018 and 33.8 percent of GDP in 2015.

Before Covid-19. KNBS estimated that about 450,000 SMEs were shutting down their businesses in Kenya annually. This translated to 30,000 monthly and at least 1,000 daily. With the pandemic in place, the numbers could be out of proportion.

If there is anything that this pandemic has taught people is the need to prepare for a rainy day. Nobody had ever thought of this. They were caught unaware and the majority are on their knees, with no source of income.

The majority of Kenyans in the informal sector have no social security cover. Some have no idea what it is all about and some have no knowledge of how to go about it. Social security for every Kenyan is the now, the future, and a necessity.

However, the lack of Social Security coverage for workers in the Informal Sector has been a challenge in the hopes of obtaining decent work, rights, and dignity for all Kenyans. Efforts are being put in place to cover as many Kenyans as possible through entities such as the National Social Security Fund (NSSF).

“NSSF launched Haba Haba Na NSSF in November 2019 to support and serve the informal sector with the USSD platform *303# as the enabler. Our mandate as the Fund this Strategic period has been to expand our reach while facilitating the transition to formality,” said a representative from NSSF.

Haba Haba gives members in the informal sector a chance to save a minimum of 25 shillings a day, with the option of withdrawing 50 percent of their contribution after consistently contributing for a minimum of 5 years. This is unlike other benefits NSSF offers in the formal sector where members have to retire or attain the age of 50 to access their savings’

NSSF is currently working with members in the matatu sector, Bodaboda sector, taxis, among others to bring more Kenyans into the social security net.

How are you preparing for a rainy future? Please leave a comment.