Inside Kenya's plan to spur manufacturing

State Department for Industry PS Dr Eusebius Juma Mukhwana during his vetting at the National Assembly on November 15, 2022. [Boniface Okendo, Standard]

The government has identified a raft of measures that will spur the growth of the manufacturing industry in Kenya, Principal Secretary State Department for Industry Dr Juma Mukhwana has said.

In an interview with The Standard, Mukhwana said the government has identified a number of challenges, which it is addressing.

Among them, PS listed the high cost of doing business, high electricity costs, and large amounts of imported products.

Others he said are lack of finance for people that want to venture into manufacturing and poor payment for products sold into the local market.

"We are enacting the industrialization bill, and putting in place a new policy. We are working with parliament to enact a prompt payments bill. We are also on course in reducing the cost of electricity for manufacturing to $10 cents per KWH. We are also pushing Kenya's agenda to sell more products into the EAC and African markets," said Dr Mukhwana.

He further said that the government is also working at attracting Foreign Investors to invest in the manufacturing sector in Kenya.

"Soon Kenyans will feel the progress that we are making," he said.

Dr Mukhwana said the government is aware that the cost of entry into manufacturing is high and that it takes a long for one to recoup their investments, making it a reserve for the 'big boys'.

He said that the Government has decided to support 'small people' that want to venture into manufacturing.

"In doing this, the Ministry of Investment Trade and Industry (MITI) is working collaboratively with all 47 counties. The county governments are providing land and counterpart financing while the National government is providing the technical support," said Mukhwana.

"...together we shall construct common manufacturing facilities with electricity, water, warehousing, transport, and marketing (including an online portal for selling products)."

The PS added that this will allow 'small' people to venture into manufacturing as Equity Bank is providing loans of up to Sh250 million to those who want to manufacture in the parks for the purchase of machinery.

"This Financial year, the State Department for Industry has also initiated a project called Viwanda Mashinani that will give machine grants to young people to purchase manufacturing equipment," said Dr Mukhwana.

In general, we are making it easier for Kenyans, especially the middle income ones to venture into manufacturing."

According to the PS, Kenya boasts of being the most industrialized country in East and Central Africa.

However, manufacturing has been suffering and declining; as a proportion of its GDP over the last 10 years, and it has reduced from 10 per cent of GDP to 7 per cent.

"Our plan is to take this back to 15 per cent by 2025 and 20 per cent by 2030," he added.

On counterfeits, Dr Mukhwana said that the country has become a major dumping ground for fake products.

However, he said that the government has set up the Anti Counterfeit Agency (ACA) within the State Department of Industry that is fighting the menace.

"In the past, our country has been an easy target for the dumping of substantial products. This is killing our manufacturing. Fake products are almost overtaking the products that we make in Kenya. We are fighting counterfeits from their sources where they come from through a process called reconditioning," said Dr Mukhwana.

He added that already all government institutions are required to purchase 30 per cent of all their needs from locally made products.

This, PS said, has ensured that annually government institutions buy goods worth Sh301 billion from local companies.

"This is a major boost to our economy, but we can do more. Kenyans also love imported products. We have started a campaign to encourage them to buy Kenyan made products. We have completed the development of the policy on buy Kenya build Kenya. We are decentralizing this to the counties," said Dr Mukhwana.

PS disclosed that local content policy is being worked on in consultation with the National Treasury and Kenya Revenue Authority.

"...especially in the automotive and other sectors. The way it works is that if you are making a knife, and you only import the metal parts; and buy or add the wooden part here in Kenya from products made in Kenya then you enjoy lower taxes," Dr Mukhwana said.

He added: "It is working very well with motorcycle assemblers and others. In motorcycle assembly, we have reached 30 per cent of local content and we are working to support them with lower taxes. Already more motorbike parts are being made within the country. This boosts our economy."

PS went on: "We are encouraging Kenyans who have Sh10 million to invest in manufacturing of such things as avocado oil, pyrethrum, processing groundnuts, honey, simsim or even barbed wire, nails, chain link, maize milling," he said.

"These people can employ up to 10 people. That is the direction that we want to go. This is what my ministry is promoting. We are organizing regional manufacturing meetings in the various parts of Kenya to encourage people to venture into manufacturing," Mukhwana said.