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Q and A with Kenya Association of Manufacturers boss Wakiaga

Saturday December 14 2019
WAKPIC

Apparel being manufactured at Bedi Investments Limited in Nakuru County on October 23, 2019. PHOTO | FILE | NATION MEDIA GROUP

By SUNDAY NATION REPORTER

1. It has been two years since the Big Four Agenda was formulated with manufacturing being at the core of it. What are some of the tangible outcomes, if any? Ouma Bernard Oloo, Nairobi

Some of the achievements include formation of the multi-agency team that championed the fight against illicit trade.

Progress has also been made in promoting local content. The government has also introduced policy and tax measures to drive the competitiveness of the sector, including reduction of withholding VAT from six per cent to two per cent, increase in Railway Development Levy from 1.5 per cent to two per cent on all imported goods except raw materials and intermediate goods, and reduction of Import Declaration Fees for raw materials and intermediate products imported by approved manufacturers from two per cent to 1.5 per cent.

2. The developed countries are way into the 4th industrial revolution, popularly referred to as 4.0. Kenya does not need to re-invent the wheel in this era where transfer of technology to boost manufacturing is big business. Strangely enough, most African countries have not grasped some aspects of the 3rd industrial revolution, including the use of nuclear energy. When should Kenyans expect you to lead discussions about this during your round-table discussions with the government? Olem E.O, Nairobi

The world is digitising rapidly, transforming our economy and how our society operates.

Last year, KAM, in partnership with the Overseas Development Institute (ODI), developed a 10-point policy framework that underlines the gaps that need to be filled to ensure that the local industry capitalises on digital technologies.

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We are also engaging the government to develop a digital industrial policy that encourages investments in digital technology.

3. For some time now, the President has spearheaded the campaign against counterfeits and other illicit goods through the Anti-Counterfeits Agency. This has drawn lots of resistance from SMEs who feel they were being ambushed and driven out of the market for the big players. What is your take on this?

How can such goods be kept at bay more sustainably instead of the reactionary actions we always witness from the concerned agencies? Komen Moris, Eldoret

Counterfeiting and illicit trade affect all levels of our society and the economy. It threatens the health and safety of all citizens.

It also undermines the concept of a free and open marketplace, which is fundamental to improving competitiveness, increasing investment, generating jobs and improving the economy.

The heightened fight against illicit trade has seen some sectors register increased market share.

Some of the drivers of this vice include low punitive measures for offenders, limited resource capacity for law enforcement, porous borders and social normalisation.

To ensure that such goods are kept at bay, there is need for tighter controls at the borders and less policed routes and enhanced market surveillance, as well as enforcement in the border towns where contraband products are sold freely.

It is also critical that once the perpetrators of these crimes are apprehended, the scope of their punishment should bring into perspective their role in economic sabotage and above all, in endangering the lives and safety of citizens.

On the other hand, public awareness on the dangers of the vice would be critical in changing consumer attitudes.

4. Manufacturing is one of the pillars of President Uhuru Kenyatta's Big Four Agenda, and taking into consideration that the government is aiming at realising this dream through the public private partnership (PPP) financing model, is your organisation contented with the implementation matrix put in place? Is the programme properly ring-fenced from the never-ending scandals involving mega projects being undertaken by government? Has your organisation advanced any conditions before participating? Komen Moris, Eldoret

Through the manufacturing pillar of the Big Four Agenda, the government seeks to transform the lives of Kenyans by creating jobs and wealth.

Specifically, the government seeks to drive the sector’s contribution to 15 per cent and create a million jobs by 2020.

As an industry, we continue to engage the government to ensure that it puts in place policy measures that not only encourage more investments in the sector but also promote the competitiveness of local industries, in turn creating jobs and wealth for all.

To this end, the government has put in place some policies and tax measures, such as the Energy Rebate Programme, reduction of withholding VAT from six to two per cent, and procurement of police uniforms from local industries to drive the competitiveness of local industries.

5. There have been reports that solar energy can lead to reduced cost of manufacturing. If the same can be tapped in large scale in Kenya, it could be a boon for manufacturers. However, investment in, and uptake of, solar energy is still comparably very low. Why are many investors seemingly skipping solar energy? Githuku Mungai, Nairobi

Energy cost and availability have always been central to industrial growth and sustained economic development for many countries around the world.

To enhance the uptake of solar energy among other renewable sources of energy by industry, the association provides financial solutions to green energy initiatives through the Sustainable Use of Natural Resource and Energy Finance (SUNREF) Programme.

6. What is your position regarding the lopsided agreements the government has had with Chinese companies that allow them to bring everything from China, including cement, which can be cheaply obtained locally? How are such agreements affecting your members? What are you doing about it? Julius Wetende, Vihiga

As a key player in the global economy, Kenya continues to partner with various players in the global sphere.

Critical for this is strengthened negotiations to ensure win-win situations for all partners in the enhancement of public service delivery.

Good governance is the most critical aspect of public service delivery.

One function of good governance is to ensure that entities in the public service act in the best interest of the public at all times.

This entails a strong commitment to integrity, ethical values, rule of law, transparency and comprehensive public participation with clear reasoning for decisions made in order to demonstrate that the results will be in the public’s best interest.

To realise this, there is need for a productive public administration and management system, which is designed to attract investments and boost local investors’ capacity to compete in the global market.

Public service efficiency is at the heart of competitiveness as it influences the cost of doing business in a country.

We continue to lobby for government efficiency that can be enhanced by modernising public service delivery capabilities and incorporating feedback from the business community and the public.

Additionally, an integrated and connected government will unlock the effectiveness and efficiency of public service.

7. In the recent past, as the economy slowed down, several employers including some of your members resorted to retrenchments to manage costs. How effective has this been and would it be your position that the situation is so dire as to warrant the retrenchments? Anne Nkirote, Syokimau

The single most important function of a well-established manufacturing base for any country is to create social equity, reduce inequality and alleviate poverty.

At present, Kenya is at a cost disadvantage of nearly 12 per cent on most of the goods it manufactures, compared to competitor countries.

Along with an unpredictable regulatory regime, these businesses have been hampered by multiple fees and charges while trading across counties, high costs in energy, scarcity of the necessary technical skills and the high cost of labour.

Therefore, in cases where the latter continues to escalate, these businesses would have to make drastic decisions in order to stay afloat.

8. The country’s balance of trade indicates that we are an import-oriented economy. The country has not invested properly in the manufacturing sector despite the huge potential to produce a substantial amount of our consumables. We have ended up importing even the most basic commodities. What are you doing to change this trend? Raphael Obonyo, Nairobi

Preference of imported products has for some time eroded local manufacturers’ market share.

There is need to change the mindset among consumers that imported goods have better quality.

As a country, we need to invest and take pride in our own creations and productions.

There exist instruments to support the production and consumption of locally produced goods in national policies and strategies.

But as citizens, we must be deliberate about the consumption of our locally made products for the sake of our country’s present and future economic sustainability.

9. Statistics released recently by the government indicating that the manufacturing sector contributes only eight per cent of Kenya’s GDP against a target of 15 per cent is very discouraging. What measures are you taking to fix this? Raphael Obonyo, Nairobi

For Kenya to achieve its Big Four Agenda and Vision 2030 goals, our approach towards the manufacturing sector has to change. It must be ‘business unusual’.

This means that we need to prioritise its productivity by making it profitable for local companies to export again, boosting their capacity to expand within the country and focusing on SME growth and productivity.

This is only attainable if we create a conducive business environment through enactment of predictable laws and regulations that attract and retain investment to all firms, including SMEs and the informal sector.

Every year, the association develops a manufacturing priority agenda that outlines immediate action that will yield tangible results in the short term and work towards reigniting the economic development of the country.

We have continued to work closely with both national and county governments as we advocate for the competitiveness of industry, a predictable policy environment, enhanced market access, government-driven SME development and a green economy, in line with our priority agenda.

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