Institute for Development Studies, University of Nairobi

Education and training policy in Kenya has emphasised self-employment as a remedy for unemployment. Currently self-employment for the Kenyan majority is viewed as synonymous with entrepreneurship in the informal sector (I.S.). This paper examines the effects of education and training on the informal-sector development and demonstrates the effects of various combinations of education and training on firm performance. Two sets of data are utilised: one, comprising I.S. entrepreneurs' returns to the Ministry of Technical Training and Applied Technology and the other, a survey of informal firms in Githiga area of Kiambu and Nairobi area. The findings show that, with the exception of higher-education- levels, there is no significant difference in firm performance (measured by income), between those entrepreneurs with no education or primary level only, and those with secondary level education. Similarly no statistical difference in performance emerged across training types. This could be attributed partly to factors that affect firm performance, not related to training, such as accessibility to informal or formal sources of credit. Technical training provides 'informals' with considerable advantages over their counterparts in innovation, machine acquisition, and general technical skills. These can be translated into profits given more training to increased accessibility to credit.