Unemployment: tax incentives as a means of curbing youth unemployment in Kenya

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Strathmore University
Many existing resources show the importance of Small and Medium Enterprises (SMEs) in an economy. This study analyses the legislative framework of SMEs and their taxation in Kenya. SMEs are a great source of employment for people in a country and this, in turn, leads to the economic growth of the country and alleviating poverty. This is because they employ many people, especially the youth as most of them cannot secure jobs in the formal sector. SMEs are mostly categorised under the informal sector due to their size, their form of ownership, and the type of economic activity that they undertake. However, they do not perform well financially due to the numerous taxes imposed on them and this has led to most of them shutting down as they do not have an enabling environment for them to survive.
Recently, newspapers have reported high unemployment rates in Kenya, with the youth being the most affected group.1 Almost four in every ten Kenyans of working age have no job positions and this is the worst level of joblessness East Africa. As per the Kenya National Bureau Statistics (KNBS) report, Kenya’s unemployment rate is at 10.4%.3 Kenya has the highest unemployment rate in East Africa as compared to Tanzania’s 9.7%4 and Uganda’s 9.7%.5 Young people represent roughly forty percent of the world’s unemployed and they are up to four times more bound to be jobless than adults.6 Young people in Kenya constitute 30 percent of the total population while youth unemployment adds up to 78 percent of the total unemployment.