Building capacity to help Africa trade better

Kenya unveils blueprint to revive industrial and manufacturing sector


Kenya unveils blueprint to revive industrial and manufacturing sector

Kenya unveils blueprint to revive industrial and manufacturing sector
Photo credit: Ministry of Industrialization and Enterprise Development

Kenya has unveiled its first-ever blueprint to revive its manufacturing and industrial exports sector. 

The decade-long plan, aptly christened Kenya’s Industrial Transformation Programme (KITP), looks beyond import-substitution and export-led policy regime to develop its industries, stimulating Kenya’s ambitions as Africa’s next industrial power.

Anchored on a five-point strategy, prioritizing leveraging Kenya’s comparative advantages, the plan aims at growing the manufacturing sector to levels above 15% of Gross Domestic Product (GDP) from a static 11% over the past decade.

According to Cabinet Secretary Industrialization and Enterprise Development Adan Mohamed, Kenya has identified 10 opportunities within the key strategies that will increase manufacturing sector jobs to 435,000 additional jobs in the next 5 years (+150% compared to today) and add Kshs. 200-300billion to the GDP.

“As an emerging economy, moving from agriculture based, low income economy to an industrial, middle income economy, it is paramount that the manufacturing share to GDP increases,” said Mohamed.

Under the plan, Kenya will build and innovate on its export engines and continue to support them. “To boost production and exports, Kenya will work to ease regulations on the sale of the exports while looking to attract a 50-100% price premium by marketing tea and coffee as a ‘Made in Kenya’ brand internationally,” said the Cabinet Secretary.

“We also plan to offer incentives for local value addition for multinational companies to consider creating opportunities for SME’s by investing in group packaging,” said the Cabinet Secretary, adding these efforts will attract Kshs 20-24 billion (USD 200-240 million) in value addition and 10,000 jobs.

Kenya is also eyeing on capitalizing on agro-processing’s global market worth Kshs.1,47 trillion (USD 14.7billion), which Mohamed said the Government “is working on attracting investors to develop three to five large integrated value chain ‘Agropolis’ projects with potential to yield Kshs.30 billion (USD 300 million) in GDP and create up to 60,000 jobs.”

Under the plan, Mohamed said the government plans to enforce the ‘Buy Kenyan, Build Kenya’ policy to nip Kenya’s huge Kshs. 82 billion textile and apparel import bill.

Painting a rosy picture of the industry, buoyed by the AGOA extension for another decade, he said Kenya is keen to grow its share of US market from the 0.4%, increasing AGOA exports to Kshs.100 billion in the next 3 years.

“We will be expanding to new geographical markets in textiles and apparel growth, and building an industrial park with a textile cluster in Naivasha to take advantage of natural power sources. Such will help us manufacture enough textiles and apparels to increase our 0.4% pie in the USD 84billion US textiles market,” said Mohamed.

He cited ongoing efforts to build a leather city in Machakos and upgrading the Kariokor leather cluster as key to netting USD 150 to 200 million in GDP and 35,000 to 50,000 new jobs.

Other efforts will include marketing Kenya leather products abroad and securing international sourcing contracts for leather products.

Mohamed said the blueprint commits to work build on capacity of local firms to profit from Kenya’s infrastructure and investments boom. Infrastructure, Residential and Commercial Construction and oil and gas and mining services have witnessed a massive boom with local firms missing out due to scale and expertise.

“Despite the healthy contribution to GDP and employment, only 8% of the 6 trillion regional infrastructure construction market is served by domestic firms. The Government has legislated local content rules such that projects worth Kshs 1 billion are awarded to domestic companies,” said Mohamed.

According to KAM Chief Executive Phyllis Wakiaga, building capacity of Kenya’s local construction companies could yield Kshs.10-20 billion in GDP and create 30,000 jobs from the bludgeoning industry.

“Kenya stands to make 35% of estimated 100 billion mining value at stake annually. The Eastern African Oil and Gas Services market could grow rapidly at around 26% over the next few years to reach USD 3.5 billion by 2020,” said KEPSA’s CEO, Carole Kariuki.

“The National Single Electronic Window System (NSEWS) together with the other administrative reforms will reduce the time taken to comply with payment of taxes, levies, duties and fees as well as facilitate cross border trade across the EAC region. The Single Window System is expected to double East African trade to $33.3 billion by 2016, and enhance transport along the Northern Corridor from the port of Mombasa to Uganda, Rwanda and Burundi,” said  Ms. Kariuki.

Also set to be improved are the non-industrial job creating sectors – Information Technology related sectors, Tourism and Wholesale and Retail. The last decade saw a liberalized economic wave driven by a thriving domestic service sector. In the period, telecommunications, wholesale and retail and hotels and restaurants have grown by 12.2%, 8.8% and 7.7% respectively.

“Kenya is keen to develop into an IT service export hub within Africa and a preferred location for business process and IT outsourcing. In tourism, we are positioning our resources to muscle into the Ksh 320 billion conferencing tourism market in Africa,” said Mohamed.

According to KAM CEO, Phyllis Wakiaga the plans commitment to build an enterprise culture with an SME pilot programme dubbed ‘Rising Stars’ Programme is a good step towards supporting SME’s growth.

Further, Mohammed said the government will focus on creating an enabling environment as Kenya seeks to transition to higher-value added manufacturing sectors. With Ease of Doing Business Reforms Agenda in top gear, with new bills signed by H.E the President last week, the stage is set for unprecedented investments. The government will focus on upgrading investment targeting strategies to attract local capital and foreign direct investment.

“We will also create a fund that will allow the Ministry or its agencies to offer attractive co-investment packages to local or foreign investors when they are needed and to support other critical activities in the industrialization programme,” said Mohamed.

Further, industrial parks along major infrastructure corridors including the SGR and LAPSSET Corridor will be created.


Email This email address is being protected from spambots. You need JavaScript enabled to view it.
Tel +27 21 880 2010