Kenya Power MD Ben Chumo (left) chats with Industrial Promotion Services group managing director Lutaf Kassam during a Kenya Association of Manufacturers breakfast meeting with key government officials in Nairobi on Thursday. Photo/Jeff Angote
What you need to know:
State is seeking to cut costs and expand foreign markets in a bid to increase the manufacturing sector’s contribution to the national wealth.
Officials of key State agencies said they would address energy costs, logistics and insecurity in order to reduce the cost of doing business in Kenya.
Kenya Power pledged to drive down the cost of electricity by between seven and nine US cents (Sh5.95-Sh7.65) per kilowatt hour.
The government is seeking to cut the cost of running factories and expand foreign markets in a fresh push to increase the manufacturing sector’s contribution to national wealth.
Officials of key State agencies said they would address energy costs, logistics and insecurity in order to reduce the cost of doing business in Kenya.
“We want to be the catalyst for economic growth of this country,” Kenya Power MD Ben Chumo said on Thursday at a joint forum of Kenya Association of Manufacturers (KAM) and heads of key State agencies.
Kenya Power pledged to drive down the cost of electricity by between seven and nine US cents (Sh5.95-Sh7.65) per kilowatt hour. The price of electricity averages about 18 US cents (Sh15.30) per kilowatt hour and is among the highest in East and Central Africa.
This promise is anchored on the additional 5,000 megawatts that the government plans to add on the national grid in the next three to five years, mainly from renewable sources.
Dr Chumo said Kenya Power’s Sh54.2 billion plan that seeks to introduce concrete poles in strategic areas within three years would reduce power disruptions as well as construction of alternative distribution lines.
Industrialists have frequently cited high energy costs, insecurity, expensive trade logistics and difficulty in accessing external markets as top challenges that have restricted the sector’s growth.
They have also identified policy stability, land banks for investment, high taxation, relevant skills, fighting counterfeits and taming cost of devolution as priority areas that the State should address.
“The tax rate is not only too high — at 45 to 50 per cent of profit — but the real burden is that one has to pay 40 different kinds of levies at different places,” said KAM chief executive Betty Maina.
Official data indicates that the contribution of manufacturing has declined from 10.8 per cent in 2008 to 9.2 per cent in 2012. Its ability to generate jobs has also dropped with only 6,244 new jobs being created in 2012 to bring the sector’s number of formal jobs at the end of the period to 277,900.
Experts say the trend is likely to continue through to 2014 after the sector registered modest growth of 4.3 per cent in the first and second quarters of 2013 and 4.6 per cent in the third quarter, according to data from Kenya National Bureau of Statistics.
This expansion was mainly supported by increased manufacture of cement, sugar, soft drinks, wheat flour, cigarettes and assembly of motor vehicles.
On Thursday, Foreign Affairs and International Trade principal secretary Karanja Kibicho said the country’s 52 missions have been put on tight contracts to develop new markets abroad.
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