Irony of killing manufacturing sector only to export farm labour to the UK

Despite the low national self-esteem implied by this programme, those who have closely followed the national economic indicators likely saw this coming long ago. Just last week, I spent considerable time with a friend who is an industry insider in Kenya’s manufacturing sector. His career was cut short a few years ago when the company he worked for (a colonial-era business) had to restructure to stay afloat.

Since then, he has ventured into a freelance business supplying industrial equipment and spare parts to manufacturers. According to him, there isn't a single industrial area or park in this country—from Busia to Mombasa—that he hasn't visited in the last three years. He confirms that many streets within these manufacturing zones have turned into ghost towns after companies that were once economic powerhouses, providing livelihoods for thousands, closed their doors for good.

Even more shocking, he reveals that the few companies still in operation are often manufacturers in name only. Much of what is sold locally as 'Made in Kenya' is actually imported and repackaged in the cover of darkness or behind heavy steel gates. This includes everything from tissue paper to more complex goods.

As I listened to this disheartening account of our manufacturing sector's decline, I was reminded of a personal experience from earlier this year. I had gone to purchase tiles from a local manufacturer in the Embakasi area. While chatting with the two young men assigned to load my purchase into the vehicle, they revealed that business has significantly declined over the past five years. They recalled that in previous years, Saturdays were so busy that they barely had a moment to catch their breath. Yet now, they have had to rotate shifts during the week to avoid widespread layoffs.

The manufacturing statistics from the 2024 Economic Survey report strongly support these observations. The sector's growth rate declined from 2.6 per cent in 2022 to 2.0 per cent in 2023. It contributed a mere 7.6 per cent to GDP and employed only 11.69 per cent of the estimated 3.1 million people in the formal sector.

According to the survey, the only subsector that showed robust growth was agro-processing, particularly in animal feeds, dairy products, prepared and preserved fruits and vegetables, and meat products. Modest growth was seen in the leather and related products, plastic products, and fabricated metals subsectors (excluding machinery and equipment).

In contrast, cement production declined, and sugar manufacturing registered a significant drop. This trend is underscored by Lafarge's recent divestiture from the Kenyan market, marking another major multinational exit in what seems to be a continued exodus.

A closer analysis of these indicators reveals that most manufacturing in the country is limited to domestic foods and basic household items—products that are either difficult to move across borders or subject to higher controls. Gone are the days when Kenya was a leading exporter of processed or manufactured goods to the Eastern Africa region.

Anthony Mwangi, the CEO of the Kenya Association of Manufacturers, lamented in a March 15 opinion article about how the cancer of corruption has eroded the socio-economic fabric of the nation, with the manufacturing sector being no exception. In a related article published on February 28, Zippora Kuria detailed how ill-advised taxes and the scourge of illicit trade have severely damaged the country's manufacturing investments.

According to the National Baseline Survey on counterfeits and other illicit trade by the Anti-Counterfeit Agency, the volume of illicit trade was estimated at Sh826 billion in 2018, representing about 9.3 per cent of GDP that year. These illicit trade flows are projected to have surpassed the trillion-shilling mark by 2023. Zippora argues that most of the factors undermining the country's manufacturing capacity are controllable—if only policymakers and political leaders would take decisive action.

Unfortunately, it is evident that both national and county leadership lack the foresight for meaningful corrective action. To them, sending young graduates for temporary jobs on European farms is seen as the pinnacle of innovation. Freelance online jobs, which have been available globally for over two decades, are now being touted as Kenya Kwanza’s groundbreaking digital revolution for the nation’s youth.

While we are on the subject, what happened to the graduates of the free online course from Arizona State University offered during the Youth Connekt Africa Summit on December 9, 2023? Can anyone trace their progress to provide objective evidence of their post-graduation economic success? It seems we have returned to the default setting of re-launching and promising anything and everything after the Gen-Z wave.

It is disheartening to note that Vision 2030’s goal for the manufacturing sector to contribute 25 per cent to GDP was abandoned as far back as 2013. The Jubilee administration halved the sector’s contribution from 13 per cent in 2013 to 7.6 per cent in 2022, despite aiming for 15 per cent over that period. The Kenya Kwanza elites further erased it from the Bottom-Up Transformation Agenda, replacing manufacturing with the vaguely defined Micro, Small, and Medium Enterprises pillar.

At this rate, only divine intervention can salvage the nation’s dwindling economic fortunes!