How to turn Kenya into regional manufacturing hub

Wrigley Company Site Engineer Patrick Nderitu (right) for explains to (from left) Wrigley Global President Martin Radvan, Machakos Governor Alfred Mutua,Cabinet Secretary for Industrialisation and Enterprise Development Adan Mohamed (left) and US Ambassador Robert Godec during a ground breaking ceremony of Wrigley new factory in Mavoko, Machakos County, last week.[PHOTO:FIDELIS KABUNYI/STANDARD]

Industrialisation and Enterprise Development Cabinet Secretary Adan Mohamed is right when he says the country is creating an enabling environment for the growth of the manufacturing sector.

The minister is backed by the growing number of multinationals seeking to make Kenya their manufacturing hub for the African continent.

Chewing gum and confections maker, Wrigley Company, which broke the ground for a Sh5.8 billion plant in Mavoko, Machakos County last week, is but the latest multinational company to chose Kenya.

Only last month, China’s Director-General of African Affairs, Lin Songtian said his country had chosen Kenya as its preferred African industrial nerve centre, owing to its reforming business environment and incentive framework.

Alluding to the favourable policies under the Special Economic Zones Bill awaiting enactment, Songtian said Kenya provides the best option for an open and conducive environment for Chinese investments.

The Chinese leader was even more specific about why his delegation chose Kenya over Tanzania and Ethiopia when, in his own words, said, “We are confident of Kenya’s legal mechanism, its one-stop shop and its incentivised framework that will attract and retain Chinese investors as a strategic conduit to the African market and the even larger Chinese market.”

The country’s attraction as a continental business hub has not been lost on European countries either as demonstrated by a German food and hospitality company — Metro Group, which last February announced plans to enter Kenya. The country will act as a springboard to capture new markets in the rest of Africa.

Investment hub

The retail and wholesale company has more than  2,200 outlets across the world. Group Senior Vice-President Dominique Minnaert said Metro Group is in the process of making Nairobi the headquarters for its business in Eastern and Sub-Sahara Africa.

None of these developments come as a surprise to analysts who have been following the Kenyan business story over the past few years. These analysts’ optimism has been reinforced by research surveys carried out elsewhere. A case in point is the Visa Africa Integration Index whose second edition shows Kenya leads the continent in the amount of business it conducts with her African counterparts, beating South Africa and Ghana, the closest competitors for the prize.

This has been largely attributed to Kenya’s rapid advancement in mobile technology and Internet connectivity.

The country’s level of trade and connectivity to the global economy was also the highest in the East African region further raising its profile as a trading hub in Sub-Sahara Africa.

Yet another feather to the country’s cap was last month’s revelation that its business conditions had improved significantly the previous month according to the monthly Purchasing Managers Index.

The country’s growing ‘army’ of unemployed youth ought to be encouraged to learn that companies continued to hire staff in response to increased production requirements in February. Sadly, for the greatest majority, the rate of job creation did not accelerate fast enough to absorb them.

But the message that is emerging from all these developments is that the youth should not lose hope as long as there is life. For these hopes to remain valid, the Government ought to bestir itself into more innovative and creative actions. These and other developments such as the country’s ranking as third in the top 20 fastest growing economies in the world this year should serve as a spur to do even better in the areas that matter to the greatest number of Kenyans.

Poverty index

The challenge to Kenyan policy makers is that although the Finance Cabinet Secretary Henry Rotich predicts the economy will grow at six per cent this year, poverty remains stubbornly high with 40 per cent of the country’s population living below the poverty level.

At the very least, this means the measures adopted to grow the country’s economy are not inclusive of the poor people. The only logical conclusion, therefore, is to go back to the drawing board and overhaul the systems that are not working.

After all, evidence elsewhere suggests that economic growth and poverty reduction are not mutually exclusive. What may take a little longer is poverty eradication as evidence from the industrialised economies shows they still have pockets of poverty amidst great affluence.