Optimism Among Kenyan Manufacturers High

Manufacturers rely on a stable, balanced and common-sense regulatory environment to create jobs and fuel economic growth. However, the burden of unnecessarily costly and duplicative rules weighs heavily on their ability to grow and create jobs. To secure investment in the manufacturing sector, the government needs to guarantee inventors a stable policy environment, supportive taxation measures, and an investment climate that facilitates the growth of industry.

The second pillar is the securing of markets by building on the ‘Buy Kenya, Build Kenya’ initiative and export competitiveness. In Kenya, exports would enable the country to effectively deal with the fiscal and monetary challenges to reduce current reliance on domestic consumption as a major economic driver.

The 2016 World Economic Forum Report places Kenya at position 122 out of 138 countries in terms of having a competitive macro-economic environment for investment compared to position 96 out of 148 in 2015.

This is way below Tanzania, Uganda and Rwanda. Kenya is only above Burundi which was ranked 124.

On the other hand, the World Bank says the ease of Doing Business in Kenya has improved to 92 in 2016 from 113 in 2015. This has averaged 108.78 from 2008 until 2016, reaching an all-time high of 129 in 2013 and a record low of 84 in 2008.

The Kenya National Bureau of Statistics (KNBS) says the manufacturing sector has remained largely subdued and is estimated to have expanded by 3.2 per cent in the second quarter of 2016 compared to 5.1 per cent in a similar period in 2015.

Besides these conflicting statistics, Kenyan manufacturer’ are optimistic of the sector’s growth ahead of the first ever Kenya Manufacturing Summit and Expo organised by the Kenya Association of Manufacturers (KAM) in collaboration with The Ministry of Industry, Trade and Cooperatives.

“The summit is a showcase of made in Kenya. We are also inviting all procurement officers to see what is in Kenya – “Buy Kenyan Build Kenya” Initiative. We want to see linkages; we want to see subcontracting. We want people to stop trading in products and start manufacturing the products,” says Ms. Flora Mutahi, chairperson of the Kenya Association of Manufacturers (KAM) board.

The summit’s theme is, “Growth opportunities in the Kenyan manufacturing Sector,” scheduled for 16-18 November 2016.

Support local manufacturers in Kenya at the first ever Kenya Manufacturing Summit and Expo. #TopManufacturersKE pic.twitter.com/z7OS4xyEEY

— KAM (@KAM_Kenya) November 8, 2016

Vimal Shah, Chief Executive Officer Bidco Group in an exclusive interview with Soko Directory during the 4th edition of the SuperBrands award ceremony in Nairobi, he said the manufacturing sector is headed for growth.

“I believe the local manufacturing sector in Kenya will grow even further from the current 10 per cent to 15 per cent to 20 per cent as long as we believe there is a better way:

One, we are competitive, two improve the productivity per capita, productivity per output that is a big issue that companies can remove a lot wastage in the system. If you remove wastage, remove in the processes, you will become more competitive and as people become competitive, we have market access,” he says.

“From Kenya, if you manufacture in Kenya you got market access in the whole of East Africa, COMESA – starts from Egypt up to Zimbabwe- and we also have got market access in to AGOA markets in America and under the EPAs we have market access in to Europe.

What we really need now is the local manufacturing to boost up,” he adds.

Ms. Flora Mutahi, chairperson of the Kenya Association of Manufacturers (KAM) board is agreeable, that the manufacturing sector contributes10.6 per cent to Kenya’s Gross Domestic Product (GDP), “This is an unfair growth, it has been at 10 per cent for a long time, however, it is important to note that manufacturing has been growing but it is good we are not losing to the other sectors.”

Mutahi says for the sector to thrive, it needs access to markets and a competitive environment.

“Access to markets at the local market has been subdued a lot by the devolved government (a model KAM supports) that has brought in a lot of cost.”

On the regional markets, “Kenyan goods into the regional markets have been declining due to tariff and non-tarrif barriers. However, we are trying to push more into the other markets.”

“We are a good launch platform ready to go in tapping the opportunities within the regional markets,” she says.

“For anybody to grow, markets are very critical. So our hope within the EAC is that they see the bigger picture; they need to see us as people who they can work together with and not as competitors.”

“If you look at any developing nation, exports are a big driver to economic growth. EAC needs to see it like that,” Mutahi emphasises.

On a competitive playing field, Mutahi says they are lobbying the government to ensure the cost of doing business comes down.

“We need a predictive environment. If new laws are coming in, let them be spoken in advance but that is not the case in Kenya. The most important thing that we want to tell the government is we need a predictive environment,” she says, as a way of attracting investors too.

Ahead of the manufacturing summit and expo, the KAM Chair says they key message is dismantling the long-held belief that local goods are not of high quality.

And to realise it, “You got to continue learning all the time. Innovate.”

“Entrepreneurs or manufacturers need to start to read the gaps within the market. The me-too behaviour is way too much. Learn to look at the opportunities around,” she says.

“KETEPA had a monopoly for over 19 years. When I told people I am venturing into tea, people were shocked. But, I was not their competitor that is how I came up with the Melvins Tea, now it is time to reinvent.” She explains.

In addition to the showcasing, the summit will deliberate on transforming the nation through industrialization and the expectations on industry in this transformation.

“We are trying to create markets within us. The whole purpose of the summit is to showcase and start building linkages and encourage people to be manufacturers. Buy Kenya build Kenya,” she says.

“We are looking at our brands across East Africa today and going global. What is required are a solid brand at home and taking it across borders and really engraving the same ethos, the same philosophy of being ethical and above board, and same qualities then transfer to people. It is important to have very clear standards, very clear understandings of what the markets are, having a product for every consumer,” she adds.

As regards to the Tripartite Free Trade Area (TFTA) agreement to be operationalized next year aimed at enhancing connectivity, reduction of costs of doing business, as well as addressing productive capacity constraints through its three pillars: industrial and industrial development, and market integration pillars.

KAM says “It is a fantastic agreement with over 6oo million with over 1.3 Trillion dollar revenue base.” However, she says operationalizing anything across borders is hard but with the rules of origin will help.

“If you look at the Intra Africa Trade, it is 11percent, Intra European trade 65 per cent and Intra Asia is 25 per cent. We will not succeed if we do not trade amongst ourselves. 11 per cent is embarrassing,” she says.

Related: Kenyan Manufacturing Sector Slows in Second Quarter