[Column] Phyllis Wakiaga: Why Kenya needs a sector-specific approach to boost manufacturing
With Kenya’s ambitious target to grow the manufacturing sector by 36% every year until 2022, isn’t it time we focus on radical customized solutions for tangible results?
Two things are true of a strong manufacturing base; one, that the more productive the sector, the more its continuous growth and secondly, the productivity of other sectors in the economy can be positively linked to the growth of the manufacturing sector.
Therefore, manufacturing is indeed a primary element from which all other development solutions stem. This is why it is a critical pillar in the Government’s Big 4 agenda.
In view of the above, it is high time that we look at recalibrating our focus and centring on specific sectors with an aim to achieve these high aspirations, whilst making remarkable changes in terms of our socio-economic development as a country.
A sector-specific approach is an impactful way to growing the manufacturing sector whilst realizing short-term goals in a meaningful and progressive way.
Let’s take an example of Tea production, as a leading commodity in the agro-processing sector (or subsector under food and beverage).
According to the Sector Deep-Dive Report released last week by Kenya Association of Manufacturers, in conjunction with Kenya Business Guide, the Tea Sector has a USD 40.5 Billion Market worldwide and this is expected to grow by 4 Billion by the year 2022. As a top foreign exchange earner in Kenya, how have we as a country positioned ourselves to be a force to reckon with, given the projected growth in global demand for Tea?
For starters, we need to curve out strategies for value addition in tea production. It is estimated, in the report, that if this is done, we are likely to see the foreign exchange income and reserves double from the current USD1.2Billion to reach USD2.4 Billion in 2022.
Compared to other countries that are major exporters of tea, for instance, Sri Lanka, which adds value to at least 50% of its total tea production, Kenya only adds value to only 2% of its tea.
Secondly, the global market preferences in tea are increasingly expanding from Black CTC teas to green teas as well as flavoured options. This means that we ought to look at diversifying to niche segments to stay ahead of the curve.
Third, present reforms in planting and replanting of tea locally aim to boost our Tea production to the desired 600 Million Kg mark by 2022. With this expected increase, we should aim to institute a hub similar to Dubai Tea Trade Centre, our own – Kenya Tea Trading Center.
This would be a key facility equipped with top-notch machinery, in which Tea value-add processes are conducted whilst ensuring that all procedures adhere to international standards to boost investor confidence.
Lastly, we should sharpen our competitive edge by creating a compelling, unique and distinguishable identity that would be an integral part of guaranteeing the quality and brand of our tea. The Make It Kenya Initiative is a good start to this.
This is just one example of many sectors, with great opportunities that would realize both short and long-term economic growth for our country.
Identified sectors such as Leather and Footwear, Textile and Apparel, Chemical and Allied, Metal and Steel, and more, hold such great opportunities to be explored in the manner I have illustrated with Tea production. The above report has outlined and recommended policy interventions that are guaranteed to bring about impactful results to the economy.
We must, however, be willing to roll up our sleeves and act now to get back on the right track towards growth as a country.