State reviews policy to save flagging manufacturing sector

By Jackson Okoth

Pressure is mounting for Kenya to review its industrialisation policy and prevent the exodus of an increasing number of foreign multinationals to more investor-friendly destinations.

Dumping, tariff anomalies, high logistical cost of importing raw materials, expensive power and an increase in counterfeit goods, among others; have forced many manufacturing firms to seek solace in other more investor friendly countries. This has left kenya’s industrial sector stagnating, despite the numerous opportunities present in the vast East African Community (EAC), a market with over 130 million people.

But there is a ray of hope in the horizon, as the Ministry of Industrialisation steps in to revive the stalling sector. The ministry has unveiled a plan to graduate all local informal businesses into medium and then large enterprises.

The Ministry of Industrialisation has unveiled a plan to graduate all local informal businesses into medium and then large enterprises. [PHOTO: BONIFACE THUKU]

"We shall conduct a census of the country’s entire industrial production, including all enterprises in the informal sector, beginning next week. The exercise, which was last performed in 1977, will involve the Kenya National Bureau of Statistics," said Industrialisation assistant Minister, Ndiritu Muriithi.

validation workshop

He was speaking during a validation workshop on the revised draft national industrialisation policy, at the Kenya School of Monetary Studies, yesterday. Once completed, the draft will be forwarded to cabinet and parliament for approval.

Available figures indicate that there are at least 45,000 small and medium sized enterprises (SMEs) and 5-6 million firms in the informal sector. These numbers compare to over 1,500 large enterprises.

"The level of investment in the manufacturing sector has been low with most SMEs not graduating into large firms at the required pace," said Industrialisation PS Dr Karanja Kibicho.

"The economic pillar within the country’s vision 2030 blue print will only be achieved if the number of formal enterprises increases," said Ndiritu.

below 10 per cent

Kenya’s manufacturing sector contribution to the Gross Domestic Product (GDP) remains below 10 per cent, a trend that has raised concern among policy makers.

"This is a sad picture and we need policy proposals and targets to reverse this," said Dr Kibicho.

The revision of the Industrialisation policy comes in the backdrop of the country’s persistent high power costs, poor infrastructure, lengthy bureaucracy and corruption, which have raised the cost of doing business, making Kenya uncompetitive as an investment destination.

"Our target is to attract 10 large enterprises by 2012, especially in areas such as mining, leather and textile industries. We also hope to create 2,000 new firms, each employing over 20 people, before the end of this financial year," said Dr Kibicho.