Hurdles in the way of ‘Buy Kenya’ efforts

By Winsley Masese

Kenya: At a one-day conference in Nairobi last Tuesday, each participant had a sweet on the table in front of him or her.

But on closer scrutiny, Foreign Affairs and International Trade Principal Secretary Karanja Kibicho realised the sweet was manufactured in South Africa.

Ironically, the conference was intended to explore how Kenyan goods can penetrate a wider market within the Great Lakes region, which has a population of 312 million.

Mr Kibicho noted that even the pencil provided for participants to jot down notes was imported, as were the toothpicks used after their buffet lunch.

“Then why are we here talking about expanding the market? For what?” he asked.

The PS said the first thing Kenya needs to do before going out to look for markets abroad is overcome the mindset that locally produced products are inferior.

“Even the suits we are wearing are from Italy, not Nairobi’s River Road.”

He said the manufacturing sector in the country is performing way below its potential, and the ramifications of this could be devastating if the trend is not reversed.

“With about 11 million youth unemployed, failure to create jobs for them is a ticking time bomb,” Kibicho warned.

Gloomy picture

A World Bank report, Africa’s Pulse, released this month painted a gloomy picture of the contribution of the manufacturing sector to the sub-Saharan Africa economy.

In the developing economies of East Asia and the Pacific, manufacturing exports as a percentage of merchandise exports stood at 76 per cent.

In underdeveloping countries in Europe and Central Asia, it stood a 21 per cent (down from 23 per cent in 2005).

But in sub-Saharan Africa, manufacturing exports as a percentage of merchandise exports decreased from 12 per cent in 2005 to 7 per cent in 2012.

And with the looming rebasing of Kenya’s economy that is expected to catapult the country to middle-income status, the national chairman at the Chamber of Commerce and Industry, Mr Kiprono Kittony, reads hard times ahead.

“Kenya will now have to compete with market players who have an edge over it, and we need to strategise on how to be competitive.”

The confectionery industry, for instance, has yet to benefit from the protection the sugar sector has enjoyed.

Though the country succeeded in convincing Comesa member states to extend safeguards to February 28, 2015, the sector seems to wobble from one failed attempt to restrict imports to another.

And as cheap imported sugar floods the local market, cane farmers are suffering.

“The sector is dominated by sugar barons who sell cheap imports without paying tax, and some of them are in the Government,” a furious Nzoia Sugar Outgrowers Chairman Joash Wamang’oli said during a stakeholders’ meeting in Nairobi last Wednesday.

It is estimated that the factory price of a 50kg bag of sugar has dropped from about Sh7,700 last year to Sh3,000 last week.

During the Tuesday conference, Agriculture Principal Secretary Sicily Kariuki admitted that the issue of cheap imports flooding the market is a threat to the manufacturing sector.

“On average, about 15 per cent of any business transaction across the globe is illegal, but in Kenya, we have exceeded that average,” she said.

Ms Kariuki noted that the depressed prices have fuelled delays in paying farmers, which has prevented millers meeting their production targets.

“It would be a miracle for Kenyan millers to meet the terms of the safeguards, and farmers are unlikely to embrace change as required by Comesa if they are not paid their dues,” Mr Wamang’oli said.

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