State launches new blueprint to grow industries

The Government has developed a new Industrialisation Blueprint in a bid to improve competitiveness in the manufacturing sector, currently losing out to China and India.

Industrialisation Cabinet Secretary Adan Mohamed is expected to officially launch the blueprint next week outlining a five-point strategy to boost productivity and job creation in the manufacturing sector. “As government, we are excited to launch this plan that is the platform towards a vibrant future for the significant opportunities in the industrial sector, enterprises and other sectors of the economy,” he said.

Mr Mohamed said the new plan builds on ongoing, mid and long-term strategies towards bolstering Kenya’s industrial and enterprise development. “Immediate strategy will focus on building Kenya’s natural advantages and reforming the regulatory and business environment key for industrial development,” he said.

The new policy intervention comes as the country’s manufacturing industry battles to remain competitive in the wake of intense competition from cheap Asian imports. According to the 2014 edition of the World Bank’s Kenya Economic Update, Kenya’s manufacturing industry is lagging behind in competitiveness and productivity thus stagnating growth and job creation.

Kenya exports 40 per cent of it’s manufactured goods to the East African region but in the recent years, China and India have been making inroads into the region eating into the country’s earnings. The World Bank further states that the widening of the country’s foreign account deficit is a cause of concern that the government needs to address.

Skills deficit

The sluggish growth of the country’s exports was attributed to low demand from the Euro zone and emerging economies, contributing to the widening of the current account deficit. However, Kenya’s manufacturers are largely to blame for their own woes through the use of outdated technology and price distortions which make it difficult to foster a competitive and innovative business environment.

“Specific analyses of key manufacturing sub-sectors show that firms operate using outdated technology, in silos within their respective value chains, and with a skills deficit both at the managerial and technical levels,” states the World Bank.

“To address this, the Government could directly support productivity programs, such as management and technology extension services, or provide incentives to improve firms’ knowledge base and equipment.”