This archive report was first published on 7 September 2019.
Kenya's unemployment and underemployment are worsening, despite policies enunciated by successive economic strategy papers. The stark truth is that these papers have not triggered the desired effect, largely due to the lack of political will to drive them in a sustainable manner.
However, this does not have to be the case. President Uhuru Kenyatta can make a profound difference by pushing through a law that implements the Local Content Mechanism (LCM). The LCM requires that specific parts of a product must be made using indigenous local materials in a host country to complete a product from a foreign country.
According to a presentation by the Global Institute of Management, a law on the LCM is the one strategy option the President has to leave a real legacy on reviving manufacturing and creating jobs. The presentation was an eye-opener, highlighting the benefits of LCM in countries that have implemented it and enacted laws to enforce compliance.
For instance, South Africa has enforced a law that 38 per cent of parts and materials used in the car industry must be made of local content. This has contributed significantly to the country's GDP, with the automotive industry alone accounting for 6.8 per cent.
The Global Institute of Management proposes a five-part schedule, over a set timeline, in which household goods should have a 30 per cent LCM, followed by bicycles and motor cycles up to 25 per cent, motor vehicles and spare parts up to 20 per cent, light industrial and agricultural mechanised equipment up to 25 per cent, and finally heavy equipment up to 15 per cent.
Key legislative drivers to make this happen are a Local Content Act, an Investment Charter, and a Local Content Blueprint. These can be put in place very quickly.
President Kenyatta has been exhorting the private sector to propose ways in which unemployment can be tackled. He should take the LCM proposal seriously and listen to the proposal, rather than allowing selfish intentions to frustrate an idea that has worked in other countries.
— Tom Mshindi is the former editor-in-chief of the Nation Group and is now consulting.
