Walk the talk on industrialisation plan to transform the economy
Friday April 28 2023
In 2015 the government launched “Kenya’s Industrial Transformation Programme (KITP)” to increase manufacturing to over 15 percent of GDP, create one million jobs, and increase foreign direct investment (FDI) fivefold.
The master plan was to be achieved mostly through the expansion of the SME sector, growth of agro-processing, expansion of export capacity, and harnessing of local content resources.
Directionally the current government is implementing parts of the 2015 industrialisation plan with special economic zones (SEZs) being established across the country while strengthening the institutional and financial capacity of the SME sector.
A number of bilateral trade agreements are being negotiated and these will expand export opportunities for Kenya’s industrial production. An increased number of TVETs across Kenya will provide essential technical skills.
What has not sufficiently happened is a well-coordinated policy buy-in and participation by all the ministries and stakeholders directly and indirectly associated with manufacturing.
The overarching policy driver is national wealth creation by strengthening the balance of payments through increased exports of processed goods and reduced imports of what can be made locally.
A targeted import substitution strategy assisted by effective fiscal policies should make it more difficult to import what can be made locally.
The display on supermarket shelves should indeed reflect the dominance of locally produced goods.
A country’s wealth is defined by how much it monetises its resources, and for Kenya these are in agriculture, livestock, fisheries, forestry, and mining sectors, with their values multiplied by capital, technologies, skills and enabling policies.
A perfect example of enhanced resource value through industrialisation is the cement industries’ recent investments in limestone mining to make clinker to reduce imports.
They are saving dollars on imports, hopefully making cement cheaper, while creating more jobs. The same is happening with the exploitation of local iron ore to manufacture steel.
However, it is in agriculture that we fail to sufficiently actualise industrialisation capacity. Sugar cane and oil crops farming, especially, should be stepped up to support local industries to eliminate imports of sugar and cooking oil.
The revival of cotton and pyrethrum industries should be prioritised to meet local and export demands. There are thousands of jobs in all these value chain activities which should fully involve counties.
There is plenty of green FDI flying around if we can justify industrial projects on sustainable climate management. Electric vehicle assembly, food security assurance, and pyrethrum-based organic pesticides are ready areas for green funding.
Energy for industries will need to be certified green. Let us walk the industrialisation talk with robust policy and budgetary support.