How Kenya is exporting jobs worth billions
SEE ALSO :Timeless lessons from a rich dadNot attracting FDIs The countries that Kenya exported its fruits, including Netherlands, Spain, Germany, and many other European countries export fruit juice worth Sh603 billion. Kenya, one of the main players in the growing of tropical fruits, is not even a fringe player in Sh1.5 trillion fruit juice market. Njagi explains that setting up fruit processing plants in Ukambani such as the one built in Makueni could work miracles. Scholastica Odhiambo, an economics lecturer at Maseno University, blames it on our limited industrial infrastructure, with fewer local firms that can invest in the sector. “We have quite a few investors and the number of that has not changed. We are not attracting more FDIs (foreign direct investments) in these areas. Interestingly, most of them are leaving,” said Dr Odhiambo. She noted that high capital outlay and lack of information or knowledge on value addition are also to blame for the dismal performance of this sector. “The only value addition we have are mainly agro-processing-most farming are subsistence in nature with low industry linkages,” said the lecturer. President Uhuru Kenyatta has realised the potential in value-addition, and has made manufacturing as one of his Big Four Agenda- others being Universal Healthcare, low-cost housing, and food security. President Kenyatta’s administration would like to increase the share of manufacturing from the current 10 per cent of GDP to 15 per cent. “The priorities they (Kenyans) would want us to focus on are clear. Kenyans want their families kept safe from catastrophic bills for medical care; they want skilled jobs, especially in manufacturing; they want to be food secure, and they want dignified, affordable homes. The “Big Four” Agenda serves each of these,” said President Kenyatta earlier this year in his State of the Nation speech to MPs. Achieving 15 per cent contribution to the GDP for the manufacturing sector, says Phyllis Wakiaga, the CEO of Kenya Association of Manufacturers (KAM), is only possible if the country focuses on making local manufacturing competitive. “One way to do this is to increase value addition to boost the value of exports and ease the country’s import bill,” says Ms Wakiaga. She cited such sectors as leather, agro-processing, fisheries, textiles and apparels as the country’s low-lying fruits. “We are unfortunately still exporting more raw materials than finished goods to global markets which does not at all give us a competitive advantage in determining critical factors such as pricing which are supposed to be channeled back into the local economy,” said Wakiaga, noting that only 16 per cent of all exported agricultural output in Kenya is taken through value addition. “Yet value addition offers great opportunity in terms of increasing our local manufacturing capacity and more importantly creating productive jobs through efficient value chains. Think what we can do with,” says Wakiaga. The Government has, of course, made it clear its intention to revamp the manufacturing sector with the aim of unleashing over 1.3 million jobs by encouraging value addition. To this end, Kenyatta’s Government is going after Wakiaga’s low-lying fruits which include leather products, textile and apparels, agro-processing and manufacturing of construction materials as well as fish processing. Currently valued at Sh35 billion, the Government’s aim is to expand the size of the textile sub-sector by more than five times to Sh200 billion within five years, unleashing 600,000 cotton jobs in the process. 500,000 of these jobs will be in growing of cotton, with 200,000 hectres of land being used for the cultivation of BT Cotton, a new strain of seed that is not prone to attacks by pests. Leather game changer Moreover, the Government wants to stem the inflow of leather products as one of the means to inject some life into the Sh14 billion leather industry, that the World Bank believes can be game changer in the country’s ambition to be a manufacturing hub. A World Bank report on leather prepared for the Ministry of Industrialization and Enterprise Development in 2015, found that Kenya was significantly less competitive than global leaders including China, Italy, and Vietnam in all competitiveness indicators, except availability of and access to raw materials. “Most African nations, including Kenya are essentially exporters of raw hides and skins and wet blue leather and maintain a low production capacity for finished leather,” noted the World Bank in the report. Already, the National Treasury Cabinet Secretary Henry Rotich has hit imports of leather products with high tariff. “I have introduced a specific rate of import duty of $5 per unit or 35 per cent whichever is higher. This should guard against undervaluation,” said Rotich. In the Budget Policy Statement for 2018, Rotich said they intend to prohibit export of hides and skins. But even with an export tax of 80 per cent on export of animal skins, some of these items still find their way out of the country. The Government intends to set up 5,000 cottage industries for leather, and complete Machackos Leather Park, so as to jolt this sub-sector to life. The Government will also support expansion of existing tanneries through incentives and access to finance. [email protected]
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