Unga Group Announces Plans To Cut Jobs Citing Tough Economic Times: "We're Targeting 50 Employees"

• Unga Group said its businesses have been adversely affected by the tough economic environment in Kenya
• The company noted that the worst-affected business is Unga Limited, whose sales have dropped significantly
• The Group Managing Director Joseph Choge revealed it settled on the workforce restructuring after other measures failed to materialise

TUKO.co.ke journalist Wycliffe Musalia brings over five years of experience in financial, business, and technology reporting, offering deep insights into Kenyan and global economic trends.

Unga Group has revealed plans to cut its workforce over the rising cost of operations.

The Group's Managing Director (MD), Joseph Choge, noted that the most affected business is Unga Limited, whose sales have dropped below target.

In 2022, the company announced plans to venture into a new line of products, cutting unga production business due to low demand.

Why is Unga Limited firing workers?

The conglomerate said unga sales have been below budget consistently, resulting in low capacity utilisation.

In an internal memo dated November 24, 2023, Choge notified employees across the company's different locations and departments about compulsory redundancies.

"Like many companies, we have been hit by the tough economic times in the country. Our volumes and margins are down, resulting in high fixed costs that are no longer sustainable.

"We are exploring alternatives to compulsory redundancies, and if this proves unavoidable, we will try to minimise the number of those affected. Currently, we anticipate redundancies affecting a maximum of 50 workers," said Choge.

Who will be affected by Unga Group job cuts?

Choge noted that the exercise will be conducted objectively and quantitatively based on skill, ability, and reliability.

The MD maintained that this is part of the organisation's move to remain afloat, adding that most businesses are taking the route to remain financially viable.

"We have worked on several initiatives to bring our cost in line with anticipated business performance, but it has become apparent that we also need to restructure our organisation. This will result in loss of jobs," he said.

Number of jobs lost in Kenya due to tough economy

This followed a report by the Federation of Kenya Employers (FKE) showing that the cost of doing business has become unsustainable since the enactment of the Finance Act 2023.

FKE noted that in the past one year, 70,000 jobs have been lost in the formal sector due to the rising cost of doing business.

"Every day, we receive notifications from employers to determine the impact of the increased costs on jobs. It shows that between October 2022 and November 2023, we lost 3% (70,000) of jobs in the formal sector, and 40% have reported that they are planning to reduce the number of employees to meet the increasing cost of operating in Kenya," the report stated.

The employers' body disclosed that the country was experiencing a high outflow of investors from Kenya due to the weakening shilling and high cost of doing business.