Jane Karuku’s appointment as the chair of Kenya Association of Manufacturers (KAM) has thrust her into the limelight of a sector that is sadly losing its long-held shine.
Ms Karuku has replaced Rajan Shah at the helm of the lobby and will lead it for two years, a period that is likely to fully test her ambitions of turning around the sector’s fortunes, boosting its job creation rate, and overall contribution to the health of the economy.
In her acceptance speech, Ms Karuku declared her ambitions to lead the manufacturing sector and push its contribution to Kenya’s gross domestic product (GDP) to 20 percent in the next six years.
The manufacturing sector is currently hit by woes, as evidenced by Sh133.2 billion worth of non-performing loans (NPLs) in the year ended December, making it the second biggest defaulter behind trade at Sh137 billion.
Besides NPLs, the sector grew at the slowest pace in 16 years in the three months to March this year, highlighting the herculean task awaiting Ms Karuku as she takes over leadership of the lobby.
“As I take up the mantle, I am looking forward to contributing to the growth of the association in line with our purpose of creating prosperity for the nation through sustainable industrialisation,” she said.
“Cognizant of our ambition to grow the contribution of manufacturing to Kenya’s gross domestic product to 20 percent by 2030, it is clear we have a lot to do to lead the manufacturing sector towards this ambition.”
Pushing the share of manufacturing to the ambitious 20 percent, however, will be no easy feat given that it currently contributes a paltry 7.6 percent.
The sector faces a myriad of challenges, including the high cost of electricity, unfriendly taxation regimes, stiff competition from regional and global imports, and a high cost of credit.
The challenges have come despite the State’s short-term interventions, including taking a protectionist stance by blocking a range of imported goods and raw materials as well as raising taxes on some of the imports to make them more expensive.
Under KAM’s plan, producing globally competitive goods both price-wise and quality-wise has been prioritised. The lobby says this will require a stable and predictable taxation and regulatory regime because manufacturing is capital-intensive and requires long-term investments.
KAM wants to promote export-led growth instead of solely relying on domestic markets.
Increased exports will mean more revenue for manufacturers and will improve Kenya’s balance of payments and foreign currency reserves.
The lobby believes it can unlock its full potential by industrialising agriculture, the key contributor to Kenya’s GDP at 21.8 percent. This will be via identifying crops with potential for higher value-addition and huge export market opportunities.
Public limelight
Also on KAM’s radar is developing small and medium-sized enterprises (SMEs). However, it reckons that this will require the government to address regulatory and tax concerns that hurt the competitiveness and productivity of SMEs.
Ms Karuku’s appointment makes her the second woman to chair the board of directors of KAM, a position whose public limelight equals that of her current position as the Group managing director and chief executive at East African Breweries Limited (EABL).
She has been instrumental in EABL’s successful journey of diversifying its product range, tapping new markets in the region, and steering clear of rivals. She has the expertise and traits valuable for turning around the sector.
Ms Karuku holds a Master’s degree in marketing from the National University of California and a Bachelor’s degree in food science and technology from the University of Nairobi.
Her glittering career path includes being a non-executive director of Barclays Bank Kenya from August 2003 to December 2014, a year in a similar role at EABL (June 2014-July 2015) before her current positions as the managing director of KBL and group managing director and CEO of EABL.
Ms Karuku has also held senior positions in other companies, including deputy chief executive and secretary-general of Telkom Kenya and the managing director of Cadbury East and Central Africa.
Many in the manufacturing sector see Ms Karuku as the person who will finally help KAM unlock the potential of the manufacturing sector based on the four-pillar plan.
As she sets down to lead one of the most vocal lobbies in Kenya, Ms Karuku is also alive to the wave of taxation that has left manufacturers on the ropes.
An example is the mandatory housing levy that compels employers to match their employees’ contributions of 1.5 percent, adding to their already high operating costs amid near-stagnant sales.
