Post misrepresents Kenya's formal employment statistics amid tax hikes

“CS Nakumicha lied on TV that only 3 million Kenyans are formally employed. It's astonishing that a high-ranking gvt official tasked with advising the president could have such inaccurate figures… (sic),” reads a post published on X (formerly known as Twitter) on September 14, 2023.

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Screenshot showing the false post, taken on September 15, 2023

The post has been shared more than 200 times.

In recent months, the Kenyan government has increased taxes on a wide range of items to raise more revenue (archived here).

The hikes will see salaried workers in the country surrender nearly half of their monthly pay to the government in the form of a 35 percent income tax for top earners, a 1.5 percent housing levy and a yet-to-be-implemented 2.75 percent National Health Insurance Fund deduction (archived here).

Kenya’s Finance Bill passed this year increased the VAT (value-added tax) on petroleum from eight to 16 percent, boosted a business turnover tax from one to three percent and created a new 1.5 percent housing tax for salaried workers (archived here).

AFP Fact Check could not find any footage of Nakhumicha Wafula referring specifically to the size of the country’s tax base as claimed, but the health ministry told AFP Fact Check that “the minister has used that statement on many occasions in the recent past to show the government's commitment to create salaried job opportunities for the majority of Kenyans who do not have jobs”.

In any event, if Nakhumicha Wafula had claimed that Kenya’s formal labour sector consisted of three million employees, she would not have been far off the mark.

The accusation that she lied is therefore not true.

Formal workers in Kenya

Official data from an economic survey by KNBS show that 3.2 million people, or 16.7 percent of Kenya’s labour force, were employed in the formal sector in 2022, up from 3.1 million in 2021 (archived here).

The same report also shows that 15.3 million people in Kenya worked in the informal sector in 2021. This number was provisionally estimated to have increased to 15.96 million in 2022.

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Screenshot showing Kenya's formal and informal sector employment data /Source KNBS

The total number of working Kenyans in 2022 was 19.15 million. This means that 83.3 percent of workers plied their trade in the informal sector.

The Geneva-based International Labour Organization (ILO) regards wage earners and salaried workers as those employed in the public or private sector and who receive compensation in the form of a salary, wage, or commission (archived here).

A definition of the formal employment sector includes jobs that offer regular compensation and working hours, and carry with them employment rights. Income tax is also paid on earnings.

On the other hand, the informal sector is characterised by private unincorporated enterprises owned by individuals or families and are not constituted as separate legal entities independently of their owners.

The Kenyan informal sector comprises artisans, cleaners, beauticians, mechanics, street vendors, and taxi and public transport operators among others. These groups of workers have few legal protections – no unemployment benefits, safety regulations, or social security (archived here). They are also unlikely to remit taxes.

According to the ILO, the relatively small portion of workers in the formal sector is not a situation unique to Kenya. Across Africa, informal work is the main source of employment, accounting for 85.8 percent (archived here).

Brookings Institution, a US-based public policy organisation, told AFP Fact Check that “Kenya does not have many industries, especially in manufacturing, mining, oil and agriculture sectors” to provide substantial formal employment opportunities.