Manufacturing and industry are some of the pillars of Kenya Vision 2030; these two must be emphasized to support the populations’ human needs and also provide materials for most of the development projects set in the vision 2030.

Kenya is an emerging economy that is averagely industrialized. It has a large manufacturing sector serving both the local market and exports mostly to the East African region. Industrialization and manufacturing cut through most of the ministries of the Kenyan government and affects all Kenyans. Industrialization and manufacturing contribute to approximately 10% of the Gross Domestic Product of Kenya per year. Consequently it is the real engine of economic growth in Kenya.

Industrialization is the process in which a society transforms itself from a primarily agricultural society into one based on industry and the manufacturing of goods and services. Industry is the production of an economic good or service within an economy.

Manufacturing however is to make or process raw materials, especially in large quantities and by means of an industrial process. Manufacturing makes an important contribution to the Kenyan economy and currently employs about 254,000 people, which represents 13 per cent of total employment in Kenya. An additional 1.4 million people are employed in the informal side of the industry. The sector is highly fragmented with more than 2,000 manufacturing units.

To guide industrialization in Kenya, the government set up an initiative dubbed ‘Master Plan for Kenya’s Industrial development {MAPSKID}’. This will provide the roadmap for development of the industrial sector. The priority sectors identified in the MAPSKID include Agro-processing; Agro-machinery; Electrical and Electronics/Information Communications Technology {ICT}. Kenya has made several attempts at industrialization and has repeatedly faced emerging and traditional challenges. Challenges include;

Lethargic rates of adoption of ICT in industries, the low levels of penetration and high cost of ICT infrastructure has hindered access and usage. This leads to low access to markets and technological information and increased costs of marketing and communication. We live in a digital age where ICT has to permeate all sectors of the economy for sustainable growth to be realized.

The performance of the manufacturing sector has further been affected by low capital injection.  Before the Chinese, local and foreign investments in industries and infrastructure had been on the decline. This could be attributed to Kenya’s poor business environment, or politics.

The entry into the local market of substandard, counterfeit and contra-band products has unfairly reduced the market share for locally manufactured products. Counterfeit trade has also discouraged innovation efforts, reduced the government revenue base and some are a health- hazard to consumers.

One can also not ignore competition from other countries for the Kenyan Market exemplified by the current battle between the Sugar manufacturers and COMESA to uphold the ban stopping other COMESA countries from entering the Kenyan sugar market. If they are allowed with the prices they offer, Kenyan sugar industry will be all but done.

Informality and poor sustainability of most local initiatives hamper industrialization. Majority of the micro and small industries are informal, rural based and have a high mortality rate. Due to the informality and concentration of formal firms in major towns, there are weak linkages, inadequate Business Development Services and subcontracting arrangements with the medium and large firms. In addition, the growth and graduation of the firms in this sector has not fully realized its potential due to a number of factors such as poor market access, restrictive legislation and regulation, high cost of credit, poor infrastructure and access to land.

High input costs result in expensive and often low-quality raw materials, rising labor costs, unreliable and expensive energy. Low productivity levels: Capital productivity in the Kenyan manufacturing sector is particularly low, compared to regional and global productivity levels.

Lack of investment in an industrial knowledge base, innovation, research and development uptake in Manufacturing limits the growth of modern methods of manufacturing in the country. The lack of knowledge, high cost and fear of change has led to low technology uptake. Lack of awareness on intellectual property rights hinders the development, registration and protection of new innovations in the manufacturing sector. There are limited technical and managerial skills; there is generally poor linkage between the industry and the training institutions.

Inadequate capacity of industries to meet product quality standards and ISO certification limits their efficiencies and product qualities. This also makes consumers reluctant to trust these organizations and their products or services.

Inefficient flows of goods and services: Inefficiency in the local transport and logistics sector (e.g. port, rail and road transport services), greatly hampers the ability of local manufacturers to access and be competitive in regional and global markets.

Weak Public Private Partnerships, the Government policy embraces the Private Sector as the engine for economic growth. Nevertheless, there is disharmony and a lack of constructive dialogue between the public and private sectors. This absence of partnership opportunities has contributed to skewed development initiatives, duplication of efforts and the development of policies that are not responsive to the needs of the Private Sector.
Uncertainty in politics with unfortunate occurrences like the post election violence of 2007 and the Westgate terrorist attack destroy industrial infrastructure physically, reduce morale and also deter foreign investment in Kenya.

Furthermore, the absence of what may correctly be seen as an “Industrialization Culture” in Kenya has inhibited growth and innovation in the sector. From a historical perspective there has hardly been any effort in locating national industrialization as a necessary and important political decision to be made at the highest level. Examples from other countries indicate how decisive political decisions led many countries to pursue extremely rewarding Industrialization policies. Japan for instance took the political decision in the 1960s and despite having no minerals, including oil, has proved to be a manufacturing powerhouse and an immense economy.

A major problem in Kenya has also been the fact that the operational industrial policies are contained in many disparate policy documents including Acts of Parliament, Sessional Papers, development plans and other sectoral policies and strategies some of which have been reviewed in the foregoing sections. The lack of a harmonized and clearly defined National Industrialization Policy has therefore negatively affected the process of industrialization and is compounded by the existence of numerous laws; a weak legal framework, as well as, overlapping ministerial mandates, all of which have culminated into an uncoordinated and slow pace of industrialization. Lack of clear boundaries on the mandates and functions of ministries and agencies has caused distortions in the value chain, weak sectoral policies, overlaps and conflicts in policy implementation.

The rising levels of poverty coupled with the general slowdown of the economy has continued to inhibit growth in the demand of locally manufactured goods, as effective demand continues to shift more in favor of relatively cheaper imported manufactured items. Goods manufactured elsewhere have also served to deter the stimulation of local industries. In addition, the high cost of inputs as a result of poor infrastructure has led to high prices of locally manufactured products thereby limiting their competitiveness in the regional markets and hampering the sector’s capacity utilization.

In Conclusion
It can however be argued that the world is quickly moving into an information age based on knowledge economies, where emphasis is laid on information systems and the service industry. The most developed countries are investing away from the heavy manufacturing industries of the last century. They even push most of their manufacturing and industrial companies to developing economies to exploit the cheap labor there and keep the pollution at bay.  One would on this basis propose that more emphasis should be laid on the service and ICT industries. These include trade, banking, education, transportation and telecommunications and not manufacturing and industry.

References
1. Kenya Vision 2030.  Ministry of State for Planning, National Development & Vision 2030.
2. National industrialization Policy 2012. Ministry of Industrialization
3. Master Plan for Kenya’s Industrial development (MAPSKID) (June 2007). Ministry of Trade and industry

Leave a Reply