Without protection from imports, industrialisation will remain limited

A section of the industrial area in Nairobi as viewed from the UAP Tower.

In the 1970s, Kenya nearly became an “economic tiger” supported by a simple but effective strategy that focused on increased production and exports, while reducing imports of what could be produced locally.

The target sectors were agriculture and industrialisation, which were so well synchronised to produce value-added goods for the Kenyan market and exports, as jobs were created and assured. The result was a strong balance of payment that easily funded development projects.

Come the 1990s, Kenya failed to resist pressure from the IMF to hastily liberalise our economy which in part entailed opening gates to imports. Today industrial areas in our cities and towns are ghosts of former selves with wasted investments and lost jobs. Economic activities in our farms and industrial areas gave way to import-based commerce with supermarkets and showrooms full of imported goods.

Gradually, Kenyan newer generations lost institutional memory of production and became heavily hooked to imported consumption. And Kenya drifted from a strong production economy to a service-based economy. How do we re-industrialise? It starts with re-defining key agricultural crops that Kenya must value- -add to supply Kenya with basic consumer goods and export surpluses.

Priority crops to significantly reduce imports are cotton, oil crops, sugar, and leather. On the minerals side, we should look at iron ores for steel industries, and various sands for glass manufacture including value addition of Magadi resources. In respect of paper, we should expansively re-establish commercial forestry.

What prompted me to pen this article is a news item this week that Unilever will be venturing into value addition of maize to replace imported corn starch while also exporting surplus. In the 1980s, I visited a factory in Eldoret that used maize to make various products like starch, syrup, yeast which fed into other industries like breweries, confectionery, and medicine formulators. In the absence of protection from competing imports, the factory eventually collapsed. Unilever will be reviving an agriculturally based value-addition industry with additional jobs and dollars saved on imports and earned on exports.

A clear proof that collapsed industrial concepts can be revived. However, the caveat is that we take a brave and balanced decision to unapologetically reduce imports that stand in the way of local production. Additionally, as we continue to attract new investments in assembly plants using imported components, we need to note that value addition on local resources may be limited. For indeed, real wealth of a nation emanates from exploitation of its natural resources.

PAYE Tax Calculator

Note: The results are not exact but very close to the actual.