Implement local content policies to steer growth

By Phyllis Wakiaga 

For our country to be successful, and for us to recover post COVID-19, we need to be deliberate in promoting local content.

This can be effectively done through the development and implementation of policies and guidelines that influence increased production, manufacture and sale of locally produced goods and services.

But businesses continue to be exposed to a constant creation and review of policies, which is tedious and costly. One of the reasons for this is poor structures and reception by institutions that have been put in place to ensure that these policies are of benefit to the people of Kenya.

For instance, the Local Content Bill, 2018 which was set to steer the sector, as well as develop and promote production, is likely not to be realized. And yet, it has been proven that promoting local content will enhance value-addition and economics for business, services, goods and experts (human capital). In tandem, this would lead to better production, improved skills, create more job opportunities and enhance knowledge transfer.

Similarly, the Buy Kenya Build Kenya Strategy was put in place to promote local businesses. As stated in the Strategy Document (June 2017), it encourages local production processes to pay special attention to local content and value addition requirements, to enhance local market access for locally produced goods and services.

It further states that, in order to spur local consumption, the government will provide subsidies and tax reliefs for industry geared to manufacturing for domestic consumption. Implementation of this strategy was estimated to cost about Kshs 2.4 billion, from 2017 for five years, and would look at existing laws and procedures with a view to aligning them to the requirements of this initiative.

But even with this clear description, and 5 years down the line, this is yet to be fully achieved. Will the country be able to once again, provide 2.4 Billion to run a similar strategy for another 5 years?

Local content policies seek to promote the supply of domestically produced goods and the employment of the local workforce. In essence, producers must source both inputs and labour from the local economy, thus assisting to reduce the volume of imports and influence an increase in the local job market.

This is sufficient evidence to steer Government to enact policies that support local production, to better the livelihoods of the people of Kenya. This also substantiates the need for Parliament to review the Public Procurement and Asset Disposal Bill, which it rejected a few weeks ago.

Again, strides made in the Presidential Directive on the reservation of a minimum of 40% of public procurement budget for locally produced goods and service, will not be adequately realized if the Bill, which purposed to, 1) requiring that all foreign tenders must source supplies for citizen contractors from 40% to 60% 2) increasing the amount for tenders where Kenyan Citizens are given exclusive preference from KES 500,000,000 to KES 1,000,000,000, is not enacted.

The European Centre for Development Policy Management (ECDPM – 2016) states that local content policies are used by developed and developing countries, to promote the use of local inputs and serve the purpose of fostering domestic industries. Adding that, any economy looking to develop economically would need to look into or prioritize promoting local content, which is a proliferation to support industrial growth.

There are still other pending Bills that can directly and indirectly influence the enhancement of local production and Kenya’s manufacturing sector, that remain unutilized. These include the Micro and Small Enterprises (Amendment) Bill 2020, which was intended to increase capacity for SMEs and the Prompt Payment Bill 2020, to deal with pending bills to suppliers and manufacturers.

In essence, there have been various additional proposed policies that could be of efficient value in building the production capacity for the country. But these great ideas remain a mirage in an economy that is also stifled with various other factors, especially the coronavirus pandemic.

There are enormous benefits that come with promoting local content and a strong manufacturing sector, mainly job creation, increased exports, savings, improved competitiveness. Therefore, let us focus on building the local sector for economic prosperity.

The writer is the CEO of Kenya Association of Manufacturers and the Global Compact Network Kenya Board Chair. She can be reached at ceo@kam.co.ke.