This archive report was first published on 19 October 2019.
Published on October 19, 2019, Kenya's industrial revolution is long overdue, with the country stuck in an agrarian-like era as a producer of raw materials.
As the leading exporter of agricultural produce to the EU, especially horticultural and cut flowers, Kenya is also a top tea producer globally. However, the path to industrialisation has been far from impressive, with farmers unable to enjoy the benefits of their produce sold in the global market.
Value-addition has been minimal, with leather industry exports taking the form of unprocessed hides and skins. Producers only take home a paltry amount, yet our finished products play a significant role in the Sh10 trillion global industry where almost everyone wears or carries a leather product.
Kenya is trapped in a generation of low-skill, low-value products and services incapable of obtaining a significant share in the value added and highly competitive global trade.
It is hard to blame the farmer, as many lack the capacity to add value to their produce before it reaches the customer. Beyond value addition, Kenya myopically imports items like pencils and other easy-to-manufacture items like bicycles that can easily be generated locally by the jua kali sector.
However, not all is lost. More organisations are using the value chain approach to increase productivity, competitiveness, entrepreneurship, and the growth of small and medium enterprises (SMEs). SMEs constitute 98 per cent of all business and create 30 per cent of jobs annually, contributing three per cent to GDP.
There is a need to modernise the jua kali sector by organising it into production cooperatives and linking industry to core production needs, including agriculture. Industrial parks, innovated in Taiwan and spread to Korea and China, have catalysed their shift to industrialisation.
Moving jua kali into industrial parks can enable them to modernise equipment with higher efficiencies and standards to meet the requirements of the highly competitive local and global markets. The focus on strengthening Technical and Vocational Training Institutions (TVETS) is critical to ensure a sustained human resource that meets the current skills gap.
To address local demand, industries should be built on a four-tier system, with the government securing ownership and guaranteeing institutional and policy reforms. Incentives are critical to attract strategic investors, and county and local residents should also be key to ownership through cooperatives.
Listing of ownership through the Nairobi Securities Exchange will provide the necessary governance and compliance checks. Industry will not only result in improved value addition but also better access to new markets.
Africa is deemed to be the next frontier for the fourth Industrial Revolution, with Kenya taking a lead mainly through digital innovations. To fully consolidate its place, Kenya must embrace practical components of value addition, manufacturing, and industrialisation.
