State assures investors, promises stable policies

From left: Industrialisation CS Adan Mohamed, ABM Production Manager Stanley Ng’ang’a and Managing Director Guy Jack during a tour of the firm’s plant in Nairobi. [PHOTO: MURAGE WAWERU/STANDARD]

The Government has conceded that a number companies have closed shop in recent times due to harsh business environment in the country.

Industrialisation and Enterprise Development Cabinet Secretary Adan Mohamed agreed that in the last 20 years, working environment for companies has not been conducive and thus led to low production. This has led to loss of jobs, revenue to the Government and low production.

“We know there has been very little focus in manufacturing sector for the last two decades leading to some firms closing down. This has denied the country substantial revenue as well as contributed to massive job losses,” he said.

production line

“The flight from Kenya has equally affected the size of the Gross Domestic Product (GDP),” Mohamed said during the launch of Associated Battery Manufacturers (ABM) East Africa Ltd’s Sh600 million maintenance-free battery production line in Nairobi’s Industrial Area on Tuesday.

ABM Managing Director Guy Jack said the new Sh600 million investment would boost local production. “With exports throughout East Central and Southern Africa, ABM has become a significant contributor to Kenyans essential foreign exchange earners, and our products, ambassadors to Kenya’s manufacturing potential,” he added.

Mohamed who was accompanied by Principal Secretary Wilson Songa observed that for a long time inadequate energy production has continued to deny the country the chance to enhance its competitiveness.

The move has seen some investors flee the country to take advantage of cheaper production costs elsewhere. This is despite Kenya being the gateway to East Africa.

The number of multinational companies the country has lost in the recent past include Procter & Gamble, Mecer, Colgate Palmolive, Castle Breweries and Tesco Supermarket.

Last year, Cadbury Kenya and Eveready Ltd closed down their production lines complaining of high cost of production.

According to the Economic Survey 2014, the country’s manufacturing sector registered 3.4 per cent growth in 2011, but declined to 3.2 per cent in 2012. The decline is blamed on high cost of production and stiff competition from imports.

However, in 2013 the growth increased to 4.8 per cent thus contributing 8.9 per cent of the GDP and provided 12.4 per cent of employment in the formal sector.

“We know that the contribution of the manufacturing sector to the GDP is wanting. Our concern is how to reverse the trend and thus accommodate more investors in the local market,” said Mr Songa.