By Ken Opalo
NAIROBI, KENYA: As the Cabinet and Principal Secretaries get down to work, many have been reading the tea leaves to determine who is the most powerful, and hence most important. In my view, as far as the country’s economic future is concerned, the most important Cabinet Secretary is Adan Mohamed, Secretary for Industrialisation and Enterprise Development. According to official figures Kenya has an unemployment rate of 40 per cent. That translates to about eight million people among the working age population. And to make matters worse, this number is on the lower side. Millions more Kenyans remain underemployed, barely scraping a living on subsistence agriculture and other informal economic activities.
If President Kenyatta should have a list of three things to do in his first term, it should be to create jobs, jobs, and more jobs.
And those jobs should not just be for university graduates in ICT or the service sector. We need millions of jobs on factory floors for our primary and high school leavers. And agriculture won’t do. Kenya is rapidly urbanising, thus draining the countryside of manpower. Furthermore, modernisation of the agricultural sector will necessarily lead to mechanisation thus reducing manual labour demand in the sector.
Unfortunately, as currently formulated our national development plans do not take the job issue head on. Take for instance Vision 2030. It is a marvelous document that for the first time in our history has set our sights on an aspiration for national economic and social transformation. As a result the plan has captured the public’s imagination in a manner that eclipses all policy documents before it. But besides the commendable flagship infrastructure projects, the plan is thin on actual mass job creation. In it there is too much emphasis on consumption and very little on production.
Furthermore, the plan is unrealistic in its estimation of the quality and quantity of human capital in the country. The fact of the matter is that the vast majority of the roughly eight million Kenyans currently out of work barely made it out of high school, leave alone university. If our plan for rapid economic and social transformation in the next two decades is to succeed, it must address the issue of job creation for low skilled workers. Programming jobs in Konza city will simply not do for this segment of our population. Indeed multinational ICT firms in the country have already announced that they will be hiring foreigners due to a shortage of skills in the local labour market – a reminder that we have a long way to go in human capital development for the ICT sector.
On the development of a manufacturing sector, Vision 2030 has three goals: (i) to restructure local industries that use local raw materials (e.g. sugar and paper manufacturing); (ii) exploiting opportunities for value addition in agriculture; and (iii) adding value to imports in the “last step” (e.g. in metals and plastics). While these considerations are laudable, they are not enough. If we are to reduce mass unemployment in a significant way we must dream bigger than this. We must think of ways to rapidly and aggressively expand the manufacturing base in the country. As I have argued before, our dream should be to become the region’s factory. Before thinking about markets in Europe, Asia and the America’s, we should identify and capture markets within Africa, starting with our landlocked neighbors.
My suggestion to Mr Mohamed is that he and his policy team should think of innovative ways of channeling capital into the manufacturing sector. Saccos have been a runaway success in the agricultural and transport sectors. Can we harness the same principle to create a platform for small and medium manufacturing companies to raise capital? Presently, Kenyans are putting up buildings left, right and centre. Many of these projects are paid for in cash. A way to alleviate the risk of overinvestment in the real estate sector could be to channel some that money to manufacturing.
The 2013 global Human Development Index ranks Kenya 145th in the world as far as human wellbeing is concerned. This is a sober reminder to policy makers that we need to do something, and do it fast. It is also a call to recalibrate our development plans to reflect the reality on the ground in terms of human capital. Focusing on high-end jobs alone will not do. We must develop an industrial base. Over to you, Mr Mohamed.
