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Columnists

Regulations should reflect innovations in industrial sector

 

The casual observer would be forgiven for thinking that it has been a bad few months for the manufacturing sector.

The latest statistics from the Kenya Revenue Authority (KRA) indicate that financial services have toppled manufacturing as the biggest source of tax revenue.

This comes on the back of news that manufacturing’s contribution to gross domestic product (GDP) was down at 7.5percent in June compared to 7.9 percent for the same period in 2018.

And at the recent inaugural Kenya Exporter of the Year Awards, much was made of Kenya’s Sh1.1 trillion trade deficit, with the value of goods imported outstripping that of exports by almost threefold.

Then there is the recent flurry of announcements of impending restructurings, including the loss of many management roles across multinational groups, which will inevitably touch on jobs here in Kenya.

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All evidence of a sector in crisis? Not necessarily.

Many of the recent retrenchments have been due to the emergence of disruptive technologies and changing consumer preferences.

However, these developments offer a very real opportunity for Kenya to close its trade deficit and deliver on the manufacturing agenda.

For manufacturers, innovation and the digital revolution allow traditional players to adapt old business models, offering new products and services to new consumer segments.

Kenya must compete with overseas manufacturers on quality and cost, and technology and innovation can help them achieve this.

But the manufacturing sector must now also compete in terms of diversity of product if we are to satisfy consumers with increasingly international tastes. All this requires significant investment in innovation and digital technologies.

Kenya’s future prosperity relies on embracing innovation.

However, investment by manufacturers in technology and innovation alone is not sufficient to get the manufacturing agenda back on track.

First, we need to be on the front foot in reforming regulation in response to technological innovation.

SUPPORT INNOVATION

Second, we need to ensure that our regulatory system is sufficiently flexible and outcomes-focused to enable innovation to thrive and third we need to support innovators to navigate the regulatory landscape and comply with regulations.

Kenya faces more fundamental challenges. More so concerning the regulatory process and predictability of their outcomes.

In part, this is because the core of many of the laws in Kenya, such as Poisons and Pharmacy Act 1956, Food, Drugs and Chemical Substances Act (Cap. 254) of 1965 and Environmental Management and Coordination Act of 1999 need to be urgently reviewed since they do not necessarily reflect the latest innovations or current state of scientific knowledge.

We mustn’t lose our investor-attractiveness shine to countries, which are rapidly reforming their regulatory environments to support future innovations.

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