Ideas & Debate

Firm industrial strategy key to sound economy

Manufacturing anchors growth by adding value to other sectors. FILE PHOTO | NMG 

Last week I noted three news items, all pertinent to missed opportunities in manufacturing. One item mentioned that, out of 6,400 potential African Growth and Opportunity Act(Agoa) items (presumed manufactured) only 20 are exported by Kenya. Then President Uhuru emphasised the need to support the much neglected small and medium enterprises (SMEs) which are the tail-end of manufacturing enterprises.

The third report was on excess power generation capacity with expensive carrying costs for consumers. Over-capacity often results from electricity demands significantly lagging behind electricity supply. In any developing economy, manufacturing has the highest uptake of electricity demands. A sluggish manufacturing sector in Kenya has meant low electricity demands (currently about 1,800 megawatt) which are contributing to unutilised generating capacity.

I am not convinced that Kenya has developed a manufacturing strategy that sufficiently addresses Kenya’s unique opportunities and priorities. Manufacturing should be viewed not as a stand-alone sector but an economic integrator that adds value to other productive sectors — agriculture, livestock, forestry and even mining.

The manufacturing department must work hand in hand with these sectors, counties, and private investors to develop sustainable industries. The department should have experts to support counties and other sectors to undertake feasibility studies on various manufacturing opportunities and convert them into marketable projects to be catalogued and showcased in investment conferences.

The secretary for manufacturing is the political champion to facilitate industrialisation which includes regulatory and fiscal frameworks, financing modelling, availability of land, infrastructure, sustainable raw material supply, affordable energy, local content, and investor confidence building. Politically, inclusion of manufacturing among the Four Pillars agenda is a strong starting point

From various pronouncements of “intentions” and MoUs by counties, one can tell that manufacturing opportunities in Kenya are numerous. However, until these are actualised they will remain unrealised opportunities and political promises.

My sincere suggestion to the new secretary Peter Munya is to make a journey across the country to see, listen, and agree on priority manufacturing opportunities. I will list a few pointers that often appear in the news.

The recent banning of plastic packaging and Kenya’s huge demand for paper should persuade the secretary to push bamboo farming as a priority opportunity to provide raw material for paper and packaging industries. The Webuye paper factory as configured is not sustainable. The company should reconsider their raw material supply model and use bamboo out-growers.

The secretary should, together with the agriculture counterpart, agree how to revive cotton farming as the basis for a sustainable textile industry. Rivatex at Eldoret should be supported and scaled up as a model for a revived cotton textile industry, which can be replicated elsewhere.

The two secretaries should then visit Bidco industries in Thika and discuss with the owners a sustainable national plan for supplying cooking oil (and animal feeds) industries with locally grown soya and sunflower to replace imported inputs. If successful, this would serve as a case study of imports substitution and agricultural diversification in Kenya.

Meetings with governors of those counties that are already planning to scale up production and processing of pyrethrum, bananas, potatoes, fruits, and nuts will enable the manufacturing and agriculture secretary to agree on help required to actualise these value addition ideas into feasible projects. Also, the Narok County needs to be assisted with their recently announced plans for a leather industry.

For us in farming, we acknowledge that Nakuru hosts the most creative SMEs in the area of locally fabricated agricultural machinery and equipment. These enterprises need to be assisted to scale up and standardise their products with possibility for regional exports.

We have in the last week seen the Mining department making positive moves to organise artisanal mining SMEs in western Kenya into value adding “mini” industries. This is the route the manufacturing officials should take.

In the past, the government has appeared to prioritise assembly plants (vehicles, computers etc) which use imported parts. Whereas these are strong on technology transfers, their capacity for jobs is not as diverse as value addition of local produce.

To meet the Big Four Agenda expectations the manufacturing authorities will need to convince us that they can roll out an action plan that delivers results on time.