Transforming Kenya through a competitive manufacturing base

By Rajan Shah

The inauguration of President William Ruto is not just a formal transition of His Excellency into office but rather, it creates a sense of a new beginning following a period of heavy political campaigns and a wait-and-see approach by many Kenyans. 

Since the beginning of the year, the business community witnessed a hesitation by many investors before embarking on new projects or expanding on existing ones. The decision-making process by the government also stagnated as the nation awaited the election of new leaders. 

All eyes are now on the government, waiting to see what the President and the elected leaders will prioritize in the short, medium and long term. Presently, our economic situation is characterized by the high and rising cost of living, unemployment, rising trade deficit and the public debt burden. 

Securing the future of industry is at the heart of our advocacy. This is why Kenya Association of Manufacturers (KAM) continues to engage the government, among other stakeholders on the broader national goal and ambitions of Vision 2030. Bearing in mind the unique views of issues borne out of years of experience in the market and engagement with stakeholders, KAM has singled out four crucial aspects that the new government must prioritize. 

First, Kenya’s global competitiveness. When we speak of the country’s competitiveness, we are looking at our ability to sustainably produce goods and services for which there is a market – at a price and quality that the market is willing to pay for. Competitiveness may be local or regional and is now increasingly global.   

On this front, the government must focus on reducing the debt burden on Kenyans by planning its expenditure based on available revenue. An unpredictable tax regime, at times, arising from the need to raise revenue to meet expenditure, hinders the business community from making long-term investment plans. Another concern is the heavy regulatory burden on both citizens and businesses. We urge the government to reduce the number of regulations, bring down the cost and time spent on compliance, and consolidate regulators at the national and county levels. It is also critical that the government strengthens our supply chains to reduce reliance on imports and creates an enabling environment for existing businesses to thrive and compete on a level-playing field with their regional and global counterparts.  

Second, export-led growth. Manufacturing sector growth will not be achieved by solely relying on domestic markets. This calls on Kenya to leverage on products where we have a comparative advantage to grow our exports. This can be realized by removing all export duties, levies, and charges, providing more tax concessions and operationalizing existing trade agreements that provide export opportunities. This will enable us to improve our balance of payments and foreign currency supply and enhance trade within the EAC and the Africa Continental Free Trade Area (AfCFTA). 

Third, agriculture and agro-processing. The agricultural sector is key to creating equitable and sustainable growth for our people. It can also lead to the economic transformation of Kenya if farm productivity is raised above what we have and linked to manufacturing through agro-processing, agro-based manufacturing, and financing. To realize this, we must consider two factors: One, increasing the productivity of crops that impact our food security to bring down the cost of finished goods, subsequently, lower the cost of living; Two, identifying crops with potential for value addition and exports.   

We recognize that Kenya has a lot of opportunities to strengthen local value chains. For this to happen, continued consultation with all stakeholders in the value chain is required. It is also critical that proper policies are put into place, and a conducive regulatory environment is created. Not to mention the introduction of crucial measures such as reviving extension services and providing incentives to accelerate growth in the agriculture sector. 

Lastly, SMEs. The government is progressively dismantling one-size-fits all approaches and finding more nuanced ways to intervene and uplift micro, small and medium businesses. However, there remains a gap between the good intentions to support SMEs to thrive and understanding their needs and the challenges facing them. Case in point, the regulatory and tax environment in which we operate in. We call on the government to create an enabling environment to drive the competitiveness and productivity of SMEs and provide incentives to assist them venture into local, regional and international markets. 

As manufacturers, we hope that moving forward, Kenya will be a better place for citizens and investors. This includes transforming Kenya into a country with a competitive manufacturing base that guarantees a strong economic foundation, productive jobs and purchasing power for citizens. 

The writer is the Chairman of Kenya Association of Manufacturers (KAM). He can be reached on info@kam.co.ke.