Accelerating manufacturing agenda in Kenya

Kenya's manufacturing sector is on an upward trajectory, with a current contribution of 7.8 per cent to the GDP, representing a value of Ksh3.18 trillion and generating 352,000 direct jobs. The government, in collaboration with the private sector, aims to increase this contribution to 20 per cent of the GDP by 2030. CNBC Africa's Flora Limukii recently sat down with Job Wanjohi, Head of Policy, Research & Advocacy at the Kenya Association of Manufacturers, to discuss the strategies and challenges involved in achieving this ambitious target. Wanjohi highlighted the significant progress made in the manufacturing sector in recent years. The value output has doubled in five to six years, from 5 billion US dollars to 10 billion US dollars. Job creation has also seen an improvement, with direct jobs increasing from 208,000 to 352,000. The focus now is on investments and partnerships to facilitate backward integration between the manufacturing sector and other key markets such as agriculture and mining. This collaboration aims to boost growth and enhance the sector's competitiveness. The Manufacturing Priority Agenda at 2024 outlines the key pillars for growth, including global competitiveness, export-led growth, SME development, and agriculture for industry. These pillars are designed to drive growth by promoting food security, expanding market access, improving credit and financial linkages, and enhancing governance systems for SMEs. The agenda also addresses key areas such as tax structures, regulatory frameworks, labor skills development, and cost efficiency to foster a conducive environment for manufacturing growth. One of the key targets set is to increase manufacturing's contribution to GDP to 20% by 2030. This will be achieved through backward integration and enhancing local content inclusion in manufacturing processes. By increasing the value addition from raw materials to finished goods, Kenya aims to elevate the manufacturing sector's GDP contribution significantly. The commitment from both the government and the private sector bodes well for achieving this target. However, the sector faces challenges such as the full implementation of the 'buy Kenya, build Kenya' initiative and regulatory barriers. Wanjohi emphasized the importance of collaboration between the government and the private sector to overcome these barriers. Efforts are being made to promote local sourcing through public procurement, subcontracting SMEs by large manufacturers, and encouraging the consumption of locally manufactured goods. Additionally, a regulatory audit conducted in 2020 highlighted the need to streamline regulations to reduce duplication and excessive charges that burden manufacturers. Looking ahead, the review and enhancement of regulatory frameworks are underway to address these issues. The aim is to streamline processes, eliminate duplicate roles and charges, and create a more conducive environment for manufacturing growth. Proposed legislation, such as the county revenue raising bill, seeks to reduce trade barriers between counties and promote a harmonized regulatory environment. With continued collaboration and targeted interventions, Kenya's manufacturing sector is poised for a positive growth trajectory towards achieving its 2030 GDP target.