This archive report was first published on 27 June 2020.
As Kenya engages the United States in trade negotiations, it is crucial to revisit the issue of implementing a local content policy to boost its manufacturing sector. This policy would require foreign companies to use local materials and resources to complete their products, thereby promoting local manufacturing and value addition.
According to Mr. Richard Mwangi, the executive chairman of the Local Content Mechanism Policy Project (LCMP), local content refers to the use of indigenous materials and resources to complete a product from a foreign country. This concept is enshrined in the Local Content Act, which requires foreign companies to meet a minimum local content requirement when obtaining licenses to manufacture in Kenya.
Despite numerous attempts to transform Kenya's industrial sector since 1954, including the 2008 Japan-supported Master Plan Study for Kenyan Industrial Development (MAPSKID), the country still imports most of its goods. The LCMP project aims to change this by promoting local manufacturing and value addition.
The project has five key pillars: the Local Content Mechanism Policy Project Act, the Local Content Mechanism Investment Charter, the Local Content Mechanism Blueprint, the Contract signed by foreign investors and local content providers, and capacity building in technical specialized skills.
The LCMP model was presented to the Ministry of Industry, Trade and Cooperatives in 2017 and 2018, and it aligns with the Big Four agenda. The project envisions a future where Kenya's bilateral trade negotiations focus on manufacturing components locally to complete imported products.
Under the LCMP project, foreign companies would be required to manufacture a minimum of 15% of their products in Kenya, with the goal of reaching 100% local content over time. The project is based on the belief that without local content regulations, there will be no meaningful manufacturing base built in the country.
With time running out on President Uhuru Kenyatta's presidency, his team at the State Department of Industrialisation must move with haste to roll out the LCMP project.
— Tom Mshindi is a former Chief Editor of the Nation Media Group and is now Managing Partner at Blue Crane Global consulting.
