A forecast analysis by asset management firm ICEA Lion indicates that firms will be laying off their employees to remain effective amid tough economic times.
“The interest rate capping law has restricted the ability to grow the top line for banks. The non-banking sector growth has also remained in the single digits. The only way for firms to remain competitive is to become more efficient in their cost base which involves layoffs to an extent,” ICEA Lion Head of Research Judd Murigi said.
The employee dismissals are aligned with lenders’ goal to bring down the cost to income ratios to include a number of other cost rationalization methods such as bank closures and voluntary retirement plans.
The Banking sector has for instance had its fair share of layoffs since the entry of holds to commercial lending with a total of 840 and 1620 jobs cuts across 2016 and 2017 respectively according to data compiled by Cytonn Investments.
Job cuts will mean a further deterioration of Kenya’s employment outlook which is currently characterized by high under/unemployment with the Kenya National Bureau of Statistics quoting the unemployment rate at 7.4 percent in its latest Integrated Household Budget Survey.