The Skills Paradox and the Collapsed Ecosystem: Entrepreneurial Skills and Youth Economic Empowerment in Nairobi's Informal Settlements

Abstract

This study examines the relationship between entrepreneurial skills and youth economic empowerment in informal settlements of Nairobi City County, Kenya. It is grounded in a convergent mixed-methods design involving quantitative survey data from 339 youth entrepreneurs across Kibera, Mathare 4A, Kangemi, and Mukuru kwa Ruben, complemented by qualitative insights from six key informant interviews. The study investigates the extent to which entrepreneurial competencies translate into measurable economic empowerment outcomes in contexts characterised by structural deprivation and limited institutional support. Quantitative findings indicate that entrepreneurial skills are a significant predictor of economic empowerment (r = 0.471, p < 0.001), explaining 22.1% of variance in the simple regression model and retaining significance in the multivariate model (β = 0.293, p < 0.001). Descriptive results reveal high levels of self-reported entrepreneurial competencies (M = 3.89), particularly in record-keeping, pricing, and cash-flow management. However, economic empowerment outcomes remain moderate (M = 3.16), with low scores in income sufficiency and financial security. Qualitative findings identify four key themes: The Skills Paradox, in which high practical competencies coexist with financial management deficits; the collapse of the skills development ecosystem due to institutional withdrawal and disrupted support systems; a bidirectional skills-to-livelihood spiral determining business success or failure; and a second-order digital divide characterised by device access without applied digital literacy. The study concludes that entrepreneurial skills alone are insufficient to ensure sustainable economic empowerment in informal settlements. Instead, structural ecosystem constraints significantly mediate outcomes, requiring integrated policy interventions that combine skills development with institutional rebuilding, financial literacy enhancement, and digital capability strengthening.