This archive report was first published on 22 December 2019.
Manufacturing Sector's Decline: A Call to Action ¶
As of 2018, the manufacturing sector's contribution to Kenya's GDP had declined to 7.7 percent, down from 10 percent in 2014, according to the Kenya National Bureau of Statistics (KNBS). Despite this decline, the sector has grown modestly, with jobs expanding from 287,500 workers in 2014 to 307,000 workers in 2018.
However, this growth has not kept pace with other sectors, and the sector's contribution to GDP remains below the target of 15 percent set by President Uhuru Kenyatta's Big 4 Agenda by 2022.
Dr. Rajul Malde, commercial director of Pwani Oil, argues that the manufacturing sector is a key catalyst for job creation and that urgent action is needed to spur growth in the sector.
"It's true you have GDP numbers, but you cannot eat GDP," Dr. Njoroge, the Central Bank Governor, was quoted as saying, highlighting the need for job creation.
Dr. Malde suggests that the government can address the issue by servicing unpaid debts for goods and services already bought, thereby spurring consumption and getting manufacturing back on track.
He also emphasizes the need to address non-tariff barriers to trade in both the domestic market and the regional market in the EAC, where Kenyan products still enjoy market leadership.
Government agencies such as the Kenya Revenue Authority (KRA) and Kenya Bureau of Standards (Kebs) need to act as enablers of Kenyan exports in the region, Dr. Malde argues.
For example, KRA's insistence on Electronic Cargo Tracking Devices (ECTS) for export trucks is leading to high transport costs and making Kenyan exports uncompetitive. Dr. Malde suggests that ECTS requirements need to be harmonized across all EAC countries and that KRA should provide the devices rather than saddle businesses with additional costs.
Ultimately, Dr. Malde argues that a bold conversation about the state of public finance in Kenya is needed, as part of the reason why nearly every government agency has been turned into a quasi-tax collection agency is budget cuts and a cash crunch at the exchequer.
He also emphasizes the need to set sights on the Africa Continental Free Trade Area, which comes into force in mid-2020, and to push for closer collaboration between the Ministry of Trade, the Ministry of Foreign Affairs, and local manufacturers.
