Conservation need not curtail industrial growth

The recent loss of the case of the coal-powered plant that was to be set up in Lamu was a victory for environmental conservation. The issue of conservation cannot be overlooked, particularly when the world is experiencing the effects of climate change as a result of environmental degradation.

However, while we must continue protecting the environment, we cannot forget that the purpose of the Lamu plant was to provide cheaper means of energy to spur the manufacturing sector in Kenya.

Studies consistently show that one of the reasons for factory closures in Kenya and their subsequent relocation to other countries is that energy is expensive and unreliable. Consequently, in relation to its regional comparators, Kenya’s annual growth rate is at 0.8 per cent, compared to Ethiopia (6.4), Rwanda (4.4), Tanzania (4.7) and Uganda (1.6), according to 2018 Unido figures.

DEVELOPING COUNTRY

Kenya being the only developing country that hosts a UN office, namely Unep, there has been a push, and with good reasons, to ensure that it is a leader in environmental conservation through the use of clean and renewable energy.

However, even as Kenya continues in its efforts for environmental conservation, it must find a balancing act that does not compromise its manufacturing agenda. For many countries, promotion of manufacturing is at the expense of environmental conservation. For example, some of the biggest global polluters are China and the US but they are also the biggest manufacturers.

In fact, both China and, more recently, the US, have been reluctant to ratify environmental treaties. This is not to say Kenya should do that. But given that African countries are only beginning to explore industrialisation at a time when the threat of environmental degradation is imminent, they must innovatively strike the balance between environmental conservation while driving the manufacturing agenda.

CHEAPER ENERGY

Getting renewable and clean energy — whether geothermal, wind or solar — is not cheap. The coal-powered plant would have provided much cheaper energy. This would have greatly spurred the manufacturing sector by lowering energy costs, one of the critical factors for the slow growth of the manufacturing sector in Kenya.

Australia, which has a long history in coal mining, recently found innovative ways of curbing carbon emissions in it.

A recent study by the IMF stated that countries no longer need to rely on manufacturing for productivity growth. A response by Jostein Hauge to this claim was produced in the September 2018 Business Monthly magazine, in which he categorically stated that manufacturing matters.

It matters because it is the traditional path for economic growth. Only a few oil-rich nations, such as Brunei and Qatar, and small financial havens such as Monaco have achieved economic growth without manufacturing. Secondly, it is the biggest driver for innovation. Thirdly, the sector has the strongest multiplier effect with others and, therefore, has the capacity to create the most jobs.

Manufacturing will be critical as a key driver for the ‘Big Four Agenda’. We cannot, therefore, afford to ignore its benefits as it is the facilitator of trade.

Ms Gachire is a lecturer at the Kenya School of Government. [email protected].