Kenya needs to invest more in reliable energy and infrastructure to spur growth in the manufacturing sector.
Ross McLean, the Africa president at Dow Chemical Company, a US multinational that manufactures specialty chemicals, said Kenya is well placed to do this as it is endowed with access to a good market given its economic dominance in East Africa.
The availability of human capital also gives the country an advantage against its sub-Saharan Africa peers, Mr McLean added.
“A robust manufacturing sector will create a multiplier effect that will lead to job creation,” he said at a stakeholders’ forum in Nairobi last week as the company sought to make its presence in the country known.
Dow has been in Kenya for five years, but its business-to-business model has seen it largely lurk in the shadows, as it does not directly interact with retailers.
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If Kenya does not get its manufacturing investment right, it risks losing out to Ethiopia, which according to Mclean, is proving to be a promising market.
“When we set up camp here, we thought Kenya was the ultimate destination in this region. But after making a foray into Ethiopia two years ago, we have experienced a sleeping giant that is rising,” Mclean said.
“Ethiopia is unique because it is among the fastest-growing economies in the world. The government there is very deliberate in powering manufacturing. Given its socialist history, it is now focusing on an industrialisation programme that will diversify its economy and give it a more capitalist outlook.”
Mclean would not reveal his firm’s profits in Ethiopia, but said they are “quite good”. In Kenya, he said the firm saw 3 per cent profit growth in 2015.
Dow has done varied business in the two countries. In Ethiopia, the firm manufactured a herbicide that kills a weed that had troubled farmers for years. In Kenya, it developed an insecticide for flower farmers, and is now working on a way to purify the water used to irrigate flowers for better results.
Dow is also in infrastructure. It was contracted by the Roads department to handle road markings, as the imported paints that were being used did not last long. The firm has created a water-based paint, which is now in use.
McLean added that Dow is working with the Government to help spur manufacturing.