In a move that could exacerbate Kenya’s unemployment crisis, the government has announced the dissolution of 202 companies, with plans to shut down an additional 115 within the next three months. This development, disclosed in a Gazette Notice dated January 3, 2025, has raised concerns about the stability of the country’s business environment and its implications for the workforce.
Registrar of Companies Joyce Koech, in the Gazette Notice, stated that the 202 companies have been officially dissolved and their names struck off the Register of Companies as of the publication date. The notice did not specify the reasons behind these dissolutions. Additionally, 115 more companies have been earmarked for dissolution within three months, pending any objections from stakeholders. Koech invited individuals to present reasons and evidence if they believe these companies should not be dissolved.
“Pursuant to Section 897 (4) of the Companies Act, 2015, it is notified for information of the general public that the following companies are dissolved, and their names have been struck off the Register of Companies with effect from the date of publication of this notice,” the Gazette notice read in part.
The dissolution of these companies is expected to have a significant impact on employment, potentially leading to thousands of job losses. Many of these companies operate across various sectors, and their closure could affect not only direct employees but also those in associated industries. This development comes at a time when Kenya unemployment rate is high, and the addition of more job seekers could strain the job market further.
The mass dissolution of companies has sparked debate about the current state of Kenya’s business environment. Critics argue that stringent regulatory and taxation measures may be contributing to the challenging conditions for businesses, leading to closures and a reduction in job opportunities. The exit of multinational companies in 2024, citing economic uncertainties and a challenging regulatory environment, further underscores these concerns.
According to The Federation of Kenya Employers, overall, Kenya unemployment rate stands at 12.7%, with youth aged 15 to 34, who make up 35% of the population, facing a staggering unemployment rate of 67%. Each year, over one million young people enter the labor market, many without any formal skills, as they either dropped out of school or completed their education without pursuing further studies.
Data from the Kenya National Bureau of Statistics showed that in 2023, Kenya experienced notable developments in employment, marked by a 4.1% growth in formal sector wage employment and a 4.5% rise in informal sector jobs. The private sector continued to dominate employment, contributing significantly to the wage bill, which grew from KSh 1,817.1 billion in 2022 to KSh 1,966 billion in 2023.
Key industries like manufacturing, agriculture, forestry, fishing, and wholesale trade were major contributors to informal employment, collectively accounting for hundreds of thousands of jobs. These figures highlight Kenya’s efforts to bolster job creation amidst economic challenges, reflecting resilience in its labor market.
A few months ago, it seemed unlikely that Kenyans would unite to push back against tough economic challenges, let alone see young people actively organizing and taking part in politics. However, the proposed Finance Bill of 2024 changed that. The government introduced a set of new taxes aimed at reducing Kenya’s budget deficit, which is expected to reach 4.3% of GDP in 2024/25.
These measures were backed by the International Monetary Fund (IMF), which had loaned Kenya $2.3 billion to help cover costs from the Covid-19 pandemic and debt repayments. The bill, which aimed to raise KES 3.7 trillion through higher taxes and more public debt, sparked unexpected nationwide protests as citizens voiced their opposition to the harsh measures.
The proposed taxes, mainly focused on VAT, were seen as unfairly affecting poorer Kenyans. This led to widespread protests, driven largely by young people. The demonstrations peaked on June 25, when protesters stormed parliament. Tragically, about 50 people lost their lives during the unrest.
While the Registrar’s notice did not provide specific reasons for the dissolutions, it’s noteworthy that under the Companies Act, a company may be dissolved if it ceases operations, contravenes the law, or undergoes liquidation. The government’s current stance and future actions regarding the business environment remain to be seen. Stakeholders are calling for more transparency and supportive measures to foster a conducive environment for businesses to thrive, thereby safeguarding employment and economic stability.
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