The Africa Industrialization Index development blueprint is a framework that was developed by the African Development Bank and other stakeholders, that has seen through the delineation of member states in terms of infrastructure capacity and contribution. Developed in November 2022, the findings from the index demonstrate each country’s achievement through a ranking system of its cumulative performance, direct and indirect contribution determinants. Ubiquitously, African has been obliterated by other continents and this has seemingly been more potent than before due to implications stemming from shifts in demand and supply. Kenya’s position, in particular, is above aboard compared to its regional counterparts but underweight compared to countries in North and South Africa. Holding the overall 9th position, Kenya’s stronghold is in its indirect contribution whereas it falls short in the performance and direct determinants sub-indices. To what end, therefore, does having a viable business-friendly environment promote if the capacity to produce and export manufactured goods is substandard?
According to the findings from the KNBS economic survey, the manufacturing sector contributed about 6.9% towards the overall GDP. To support this need for improvement, Kenya has witnessed the development of different policies that have shaped its manufacturing bandwidth over the years. Suffice to say, these different blueprints have been championed by different regimes. These policies are; the Sessional paper No. 10 of 1965 which advocated for rapid progress, the Import substitution policy of 1970 and thereafter the Structural Adjustment Program of the 1980/90s whose implications were to, inter alia, strengthen the capacity of the industrial field, then came the ‘new millennium’ policies which included the Economic recovery for wealth and employment creation policy of the 2000s, the Vision 2030, the Kenya Industrial Transformation Programme and the Kenya National African Continental Free Trade Area implementation strategy 2022-2027, which attempted/attempts to increase manufacturing contribution to the economy. Yet despite all these efforts, there is still the lack of headway and substantial breakthrough in the achievement of significant export volumes.
Local manufacturing initiatives have long been overtaken by importation, as demonstrated by trade imbalance which seem to grow by year. As at 2017, Kenya’s trade deficit stood at KES 1.1 million and by 2021, the mark had dropped to KES 1.4 million. Translating this to the current USD rate, Kenya’s 2017 trade deficit mark was USD 10,460.28, which in comparison to South Africa’s trade surplus of USD 550.65, clearly shows that Kenya fails in effective implementation and adoption of functional policies.
Best Practices
Kenya’s manufacturing sector challenges doesn’t stem for the lack of policies rather it chokes on the inadequate structural frameworks that ought to support policy implementation. These frameworks include a clear communication of the mandate of relevant institutions, access to market information through regular updates on bilateral and multilateral trade agreements and financing options and exploration of new value chains that could enhance the country’s visibility in international markets. In addition it is equally important for all stakeholders to agree on the development of an appropriate monitoring and evaluation framework that could help identify areas that require fine-tuning and improvement while curbing potential spillage and risk inefficiencies.
There is a need for labor reskilling and up skilling to enable the country and the continent at large to be at par with other prominent continents when it comes to infrastructure. In the financial year 2021/22, Kenya’s total expenditure towards the education sector increased to KES 486.1 billion. In contrast, the total development expenditure reduced by 36.2% to KES 10.1 billion, further demonstrating that the education sector still has untapped potential, which if governed appropriately, could be bettered, to facilitate skilled, qualified workmanship that will ultimately champion Kenya’s manufacturing potential. Take for instance, 3D printing and the impact it has had on the manufacturing industries of China. With this up skill, 3D printing has enabled the digitization and revolution of innovative tech and high quality manufactured products, creating capacity in flexible supply chains, additional employment opportunities and export niche. Software up skilling and robotics are also avenues that stand to reduce unnecessary manufacturing costs. Concurrently, support should be bestowed upon research and development fields which should equip varsities/TVETs and research centers at large with the necessary assistance in terms of exposure, financing and wherewithal, to adorn job holders and stakeholders to be better placed and commensurate with the current manufacturing trends. Governments such as that of the United States and China, for instance, are funding universities like John Hopkins, Stanford and Peking universities, et al, to spearhead national research whose outcomes are then adopted by the private sectors.
Whilst efforts from the different policy initiatives are present, there seems to be an ‘all talk and no show’ depiction over the years, despite the paramount need to change the ever-too familiar consumer narrative. Kenya has time and time again been caught flat-footed in recovery efforts as it is apparently evident that its manufacturing contribution to the GDP is threatened by economies such as Tanzania, Namibia and Algeria. Urgency to implement functional and operational efforts to strengthen the private sector and the FDI stability should be observed. Empowerment of Kenya’s special economic zones should be implemented. It is commendable that the energy regulator EPRA has championed for a new power rate tariff of Sh10 per kWh to enable the SEZs boost their export capacities. However, there is room for improvement for the intercession of these entities and the industrial parks as well.
What is of most importance to note is the need for an effective governance structure. One that does not selfishly interfere with manufacturing innovation, creativity and business participation. Kenya stands to gain from its economies of scale and developed potential as well. With constructive policy implementation, collaborations and investment, drastic and impactful manufacturing efforts will gradually be evident.