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How exporting our products will step up ailing economy

OPINION
By Isaac Kalua Green | August 1st 2021
A KEPHIS inspector at the Jomo Kenyatta International Airport exit point inspects avocado and other horticulture products destined for export on July 23, 2021 [Muriithi Mugo, Standard]

We are living in difficult economic times. In 2020, global Foreign Direct Investment (FDI) flows fell sharply by 35 per cent. This was akin to losing just over a third of the water in your tank. If you were using that water for irrigation, at least a third of your crops would potentially wither and die.

Decreased investment and the accompanying depressed economy have resulted in a death of jobs across the country. Sadly, the immediate future doesn’t look good. According to the World Bank, 52 per cent of large companies expect that their operations will only return to full capacity in 2022. If large companies with billions of shillings at their disposal are staggering in such a manner, then SMEs are definitely flailing on the ground.

But all is not lost. Last month, the World Bank released a report that vindicated my lifelong belief that the environment can revitalise the economy. In a report aptly titled ‘The Economic Case for Nature,’ the World Bank revealed that if we fail to protect ecosystem services, the global GDP risks declining by nearly Sh300 trillion annually by 2030.

These ecosystem services include marine fisheries and wild pollination. Tragically, 14 of the 18 assessed ecosystem services have declined since 1970.

As our economy begins awakening from the Covid-induced slump, we must increasingly anchor it in nature. This means initiatives like boosting fisheries both at coastal Kenya and among lake-adjacent communities like those in Nyanza and Turkana.

As such, last month’s launch of a Sh120 million fish processing plant in Kakamega was a step in the right direction. Fish processed in the plant will be exported to Europe thus earning us valuable foreign exchange revenue and creating local jobs.

Incidentally, the currently weak shilling presents Kenya with a golden opportunity to earn substantially more from exports. Currently, 1,000 dollars exchange for about Sh108,500.

Before Covid threw a grenade into the Kenya shilling, the 1,000 dollars would have exchanged for Sh100,000 and below. What this means is that a Kenyan company importing a product worth 1,000 dollars is paying Sh8,500 more for the product.

If that company is buying millions of dollars’ worth of products, it will lose millions of shillings. Which is why we must take urgent steps to revitalise our export industry, just as Governor Wycliffe Oparanya has done through the fish processing plant. According to the Central Bank of Kenya, imports of goods increased by 21.9 per cent in the first half of this year. However, this was largely because of increased importation of oil and other intermediate goods that are used in manufacture.

The increased cost that these manufacturers are incurring because of a weak shilling will be passed on to the consumer.

Against this backdrop, I return here to suggest that what may sustain our economic growth is reforms that will lead to the uptake of ‘Made in Kenya’ products. If ever there was a time for us to cultivate focus on local manufacture and production, it is now. The national government must introduce strategic and tactical initiatives to boost local production and export. Our local manufacture report card is dismal. The UNIDO 2020 Competitive Industrial Performance (CIP) Index ranked Kenya’s industrial competitiveness at a lowly position of 115 out of 152 countries.

To boost local manufacture, the Kenya Association of Manufacturers (KAM), where I serve as chairperson of the environment and sustainability committee, is ready to cooperate with the government and all stakeholders to heighten local production and export of those local products.

Currently, our key export products include horticulture and apparel products. We must add more products to this portfolio. Even SMEs must be supported to join the export party. When I was in my twenties, I exported a lot of handicrafts and made a fortune. Now is an even better time. Let us move from plan to action by thinking and acting green!

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