The Crucial Role Played by the Manufacturing Sector in Kenya

The manufacturing sector contributes 11.3 percent of Kenya’s GDP.The sector comprises of about 3,700 manufacturing units and is divided into several broad sub-sectors. The output from the manufacturing sector was valued at Kshs 1,097,082 million in 2014 up from Kshs 1,042,181 million in 2013 in the Kenya National Bureau of Statistics Economic Survey. This sector has benefited Kenya in various ways that has seen the country’s economy grow.

Contribution to job creation

The manufacturing sector employed over 280,300 people directly in 2013 upfrom271, 000 people in 2012.The informal sector contributes further employment of 1.6 million people.

Value addition by the manufacturing sector

Manufacturing offers multiplier effects through economy wide linkages. For example, more than 25 percent of output in Kenya’s transport sector is used as an input to other domestic sectors, including manufacturing.

Contribution to public finance

Given the figure above it is clear that the manufacturing sector also makes a huge contribution to the tax revenue in terms of income tax recipients from employees, social security contributions and corporation tax levied on profits.

Consumer benefits of manufacturing

Goods produced at the manufacturing sector are of great benefit to local consumers since the goods are of high quality, affordable and easily available. Buying locally made products is a source of great pride to Kenyans since it eases reliance on imported goods. Imported goods are not always up to standard and can sometimes be counterfeited.

International trade and foreign earning

About two thirds of goods produced by the manufacturing sector in Kenya are consumed locally while the remaining third exported.Overall,exports in 2012 increased by 12.3 percent to reach US$9.4 billion from US$8.4billion.The African market is the largest destination of Kenya’s exports taking up 48 percent while 26 percent of our goods go to the East African community. The European Union is Kenya’s second main trading partner and accounts for 24 percent of Kenyan exports, of which 7.8 percent go the UK.

Investment

Kenya has attracted both local and international investors through Foreign Direct Investment (FDI) and joint ventures. The manufacturing sector provides domestic firms and worker with exposure to foreign technology and knowledge. This comes in through exporting international buyers or competing with foreign firms in regional and global markets.