As an aftermath of Gen Z-led protests, Kenya’s national discourse has undergone a major transformation.
This generation, fuelled by digital activism has amplified the demand for reforms and better governance in the country.
Their voices have not only sparked national conversations but have also united Kenyans across the board—from factory workers to entrepreneurs, farmers to consumers, young to old.
At the core of this conversation are several issues that I can summarise into three namely, governance, accountability and economic transformation.
These elements are crucial in addressing job creation, reducing the cost of living and fostering national prosperity.
The manufacturing sector sees this shift not just as a social and political awakening, but as a pivotal moment for economic rejuvenation, particularly through the revival of local industrialisation.
Currently, the manufacturing sector contributes 7.6 percent to Kenya’s Gross Domestic Product (GDP) (KNBS, 2023).
While this may seem modest, the sector’s impact is incredible, providing over 362,300 wage jobs. As we aim to increase this contribution from 7.6 percent to 20 percent by 2030, the sector is poised to create over one million jobs and triple revenue to a trillion shillings. Clearly, manufacturing is the linchpin of Kenya’s economic transformation.
Globally, no developed economy has thrived without prioritising industrialisation, including the East Asian “miracle” countries like South Korea, Malaysia and Singapore.
As we aspire to emulate these nations’ growth trajectories, we must learn and emulate their strategies.
Studies show that these countries prioritised industrialisation as a means of achieving economic transformation. Unfortunately, Kenya, like many developing countries, has struggled to realise its industrialisation goals.
Recent policy decisions, particularly in sectors like leather, have had adverse effects. For example, lowering export levies on raw hides and skins undermines the leather industry’s potential by encouraging raw material exports instead of fostering local manufacturing. This is a contrast to the policies that propelled developed nations to economic success.
To drive Kenya’s economic transformation, we must review and update our policies to address current challenges and future needs.
This includes adopting proven strategies tailored to our unique context. Kenya’s National Industrial Policy, last updated in 2012, needs a comprehensive review to align with the sector’s current dynamics and global trends. Additionally, fully implementing existing policies, such as the National Tax Policy, is crucial.
In 2022, the Kenya Association of Manufacturers (KAM) partnered with the government to pursue a shared vision of increasing the manufacturing sector’s contribution to GDP to 20 percent by 2030.
As part of this effort, KAM engaged its members to identify opportunities within manufacturing value chains ns to unlock growth potential. Key recommendations include enhancing the competitiveness of locally made products, implementing tax incentives, strengthening local value chains and lowering the cost of production through competitive cost of power among others.
To transform Kenya into an export-driven economy, we should benchmark against successful countries like Taiwan, South Korea, Malaysia, Thailand, Singapore, China, and India. Based on the experiences of developed nations, industrialisation is key to achieving sustained economic growth.
Kenya must develop and implement policies that not only support the growth of existing industries but also provide a platform for its youthful population to innovate and invest in the sector.
The government must incentivise local industries to produce for domestic and exports thereby capitalizing on regional and international markets, such as the East African Community (EAC), the African Continental Free Trade Area (AfCFTA), Comesa, Agoa, and the European Union. While manufacturers are acquiring the knowledge needed to access these markets, export competitiveness remains a concern.
In 1990, Kenya, Vietnam, and Chile shared a similar Competitive Industrial Performance (CIP) score of about 0.017. Today, Vietnam and Chile have significantly improved their industrial competitiveness, while Kenya lags. This discrepancy highlights the importance of deliberate and focused interventions to enhance competitiveness and foster an export-oriented economy.
The manufacturing sector holds the potential to address Kenya’s developmental challenges, including the need to create decent jobs for the youth, increase tax revenue, and grow exports to earn foreign exchange.
The writer is the Ag CEO of Kenya Association of Manufacturers
