Inside Kenya’s 10-year manufacturing dream

An employee of Reddamarc leather centre working on a pair of shoe at the factory along the Eastern bypass. PHOTO: FIDELIS KABUNYI/STANDARD

NAIROBI: Kenya has launched an ambitious 10-year plan to revive the manufacturing and industrial sector, which is hoped to generate one million new jobs.

The blueprint will also see the creation of an industrial development fund, industrial parks along infrastructure corridors, and support the agro-processing, textile and mining sectors, among others.

The plan developed by the Ministry of Industrialisation and Enterprise Development is expected to pump an additional Sh200-Sh300 billion into the economy in the next five years.

Industrialisation Cabinet Secretary Adan Mohamed said the country has identified 10 opportunities within the key strategies that will increase manufacturing sector jobs by 150 per cent to 435,000 in the first five years.

“As an emerging economy, moving from an agriculture-based, low-income economy to an industrial, middle-income economy, it is paramount that the manufacturing share to GDP increases,” Mr Mohamed said last week during the launch of the master plan.

INDUSTRIAL TRANSFORMATION

This is the first blueprint targeted at reviving the ailing manufacturing sector.

The industrial transformation programme will see the development of a food processing hub in Mombasa to process imported agro-based products, such as wheat, palm oil and rice.

Agro-processing zones will also be set up in Kisumu, Meru, Galana, Nakuru and Kwale to process local commodities, such as avocados, mangoes, cassava, passion fruit and potatoes.

A fishing port and fish processing zone will be established in Lamu, while a textile hub will be set up in Naivasha to attract anchor investors.

The Government will also launch a leather centre in Machakos and two other locations to be identified.

Additionally, the plan will see the development of a low-cost housing ecosystem, with an accessible and affordable environment to support social housing.

It will also develop local content to support local manufacturing sectors, such as the steel industry.

The plan will see Kenya seek to attract international oil and gas mining service firms to the country, and promote a Business Process Outsourcing (BPO) cluster.

To develop small and medium enterprises (SMEs), the Government will select 50 SMEs with the highest potential every year in key sectors and support them with credit, training and networking assistance.

It will also offer incentives for local value addition for multinational companies to consider creating opportunities for SMEs by investing in group packaging. This is expected to attract between Sh20-Sh24 billion in value addition and create 10,000 jobs.

The transformation programme aims to increase manufacturing’s contribution to GDP to 15 per cent, increase Foreign Direct Investments (FDI) five-fold, and put the country among the top 50 in ease of doing business rankings by 2020.

The manufacturing sector has remained flat in the last decade, contributing a static 11 per cent to the value of Kenya’s goods and services.

This is the most significant plan yet that the Government has come up with to address the growing import bill that is now hurting the economy by putting pressure on the shilling.

The programme will also help Kenyan producers cash in on the growing middle class that is currently providing a market for finished goods largely from China.

Kenya’s imports have expanded to stand at 40 per cent of GDP, compared to 15 per cent for exports.

“To boost production and exports, Kenya will work to ease regulations on the sale of exports, while looking to attract a 50-100 per cent price premium by marketing tea and coffee under the ‘Made in Kenya’ brand internationally,” Mohamed said.

The Government also wants to create model factories to impart manufacturing expertise to SMEs, as well as strengthen sub-contracting policies to improve links between big and small players.

THE CHALLENGES

The blueprint adds that an industrial development fund will respond to investment opportunities in priority areas and accelerate development of infrastructure for priority projects.

Some of the challenges identified in the dream include access to sizeable farmland of more than 10,000 acres and connected by good quality transport infrastructure.

The dream is also counting on the availability of a development zone, logistics and energy infrastructure near the Port of Mombasa to keep costs low and unlock processing and regional exports.

It will also meet challenges accessing a dedicated fishing port and supporting infrastructure, such as cold storage, needed to attract the tuna processing industry.

The high price of land in urban centres further restricts the development of low-cost housing, as does a lack of skills beyond the basics in apparel production, low expertise to produce finished leather and leather products, and a limited talent pool for engineers in key sectors.

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