Interview: Kenya Association of Manufacturers

Associations play a vital role in representing the interests of their members at an industry and national level. We asked Mr Mucai Kunyiha of the Kenya Association of Manufacturers to find out more about the current state of the sector and what it is doing to advance its agendas

Kenya Association of Manufacturers (KAM) was established in 1959 as a representative of manufacturing and value-add industries in Kenya. Its mission: to promote competitive and sustainable local manufacturing.

It uses fact-based advocacy to collaborate with governmental agencies in ensuring a flourishing manufacturing sector, with the goal of achieving a double-digit contribution to GDP.

We spoke to Mr Mucai Kunyiha, Chairman of KAM, to find out more.

Africa Outlook (AFO): Since inception, how has KAM developed and progressed in terms of its key objectives?

Mucai Kunyiha (MK): Since its establishment in 1959, KAM has evolved into a dynamic, vibrant, credible and respected business association that unites industrialists and offers a common voice for businesses and SMEs. We have also built a sustainable organisation through membership growth, and our very own building opened in December 2014.

We have expanded our regional presence. This has played a key role in enhancing our advocacy work at county level. Through our advocacy, we have seen business grow and expand. Some of our advocacy issues include: ‘Buy Kenya Build Kenya’; fighting against illicit trade; access to affordable and reliable energy; infrastructural development such as roads and water.

This year, we have seen local manufacturers big and small step up to support the country in the fight against COVID-19 and to keep Kenya moving. They have produced essential items, such as hand sanitiser and personal protective equipment including full body suits, masks and gloves to be used by medical personnel. Our automotive sector, led by Mutsimoto Company Limited, also developed the first ever locally manufactured ventilator, which was recently certified by the government.

AFO: What do you find most exciting about the manufacturing industry in Kenya?

MK: The local manufacturing sector is diverse, with 14 sectors located all over the country. It is exciting to witness first-hand the impact manufacturers make on the societies in which they operate, and nationally it is mind-blowing. They are a key engine for job and wealth creation as well as the economic sustainability of the country.

The technological advancements used to manufacture some products also makes the sector exciting; for example, a machine that produces a lot of goods in a very short time to meet market demand. Recently, we visited one of our members, who is the power behind most major brands in the hospitality

sector. The manufacturer produces kitchen and laundry equipment, and is also a cold-room solution provider, offering innovative products and services from concept development, designing, sourcing, fabrication and installation to after-sales service.

AFO: On the flip side, what are its biggest challenges?

MK: We hope to contribute 15 percent to the GDP by 2022, as outlined in the Big Four Agenda. However, we are hindered by challenges such as the quality of power, difficulties in accessing finances, unpredictable policies and regulatory environment, shortage of an adequately skilled workforce, market access in the region, illicit trade which eats into local manufacturers’ market share, an influx of cheap goods, taxation and county licenses and fees which hinders trade in and among counties.

We are consistently engaging government to resolve these challenges, in order to achieve our development goals as a country for job and wealth creation.

AFO: Can you talk a little more about Kenya’s sustainable development goals and how KAM aims to work towards them?

MK: SDGs are universally accepted, most importantly because they create opportunities for different industries to create shared value. In the manufacturing sector, for instance, we do see the coming together of market potential, societal demands and policy action. It is therefore critical for all stakeholders, the private and public sector alike, to unite and fast-track the realisation of the SDGs before we run out of time. This has seen us rally our members and the wider private sector to embrace and integrate sustainability within their business strategies and operations.

We at KAM resonate with the 14 sectors of manufacturing under our membership whose role is crucial in the implementation of the SDGs.

While real progress has been made by the business community, action to meet the SDGs is not advancing at the speed or scale required. Furthermore, the current pandemic has impacted on the implementation of SDGs. For example, it has reversed gains made in SDG 3 on good health, achieving clean water and sanitation targets (SDG 6), weak economic growth and the absence of decent work (SDG 8), pervasive inequalities (SDG 10), and above all, entrenched poverty (SDG 1) and food insecurity (SDG 2).

At the moment we need goodwill and commitment from all stakeholders – private sector and government – to achieve these goals. We must focus on addressing underlying factors through the SDGs, even as we seek to overcome COVID-19.

Now is the time to embrace new innovative ideas to fast track our progress in realising SDGs. However, this must be hinged on robust institutional frameworks with distinct, yet complementary roles, responsibilities and accountability measures.

At the beginning of the year, KAM, the Office of the Deputy President and Global Compact Network Kenya carried out a study to understand Kenya’s SDGs readiness from a policy, legislative and institutional perspective. The report provides a

legislative review of Kenyan Laws to identify areas that need to be reformed to align with the SDG commitments. It has also identified gaps in the laws and policies across the 17 goals, with an emphasis on how the country can achieve green economic growth.

The recommendations in the SDG Readiness Report seek to support enabling legislation targeting specific SDGs and sub-goals. They include consolidation and integration of institutional framework through creation of a multi-sectoral agency that coordinates all the institutions dealing with SDGs; integration of the SDGs within the constitutional, legislative and regulatory frameworks; and involvement of the counties in the implementation of the SDGs.

AFO: How has COVID-19 affected the manufacturing industry?

MK: Earlier this year, in partnership with KPMG, we launched a report on the impact of COVID-19 on the manufacturing sector in Kenya. The survey sought to highlight: challenges facing manufacturers in the midst of COVID-19, and how they are adapting to these changes; manufacturers’ perception on the economic measures put in place by the government in response to COVID-19’s effect on the economy; and proposals to address these challenges.

The report revealed some upsetting statistics.

For example, 91 percent of non-essential goods manufacturers have seen a significant fall in demand, compared to 74 percent of essential goods manufacturers. Manufacturers’ top priorities are reducing costs (78 percent), job retention (61 percent), and improving cashflows (53 percent). However, 40 percent of manufacturers have had to reduce their casual workforce, with 73 percent retaining their permanent employees.

We were pleased to see that more than 90 percent of manufacturers have adhered to guidelines put in place to curb the spread of the virus such as sanitisation points, social distancing and providing PPE equipment. In terms of economic incentives, 71 percent of manufacturers indicated that zero tax on income less than Kshs 24,000 ($220 USD) was most helpful while reducing the VAT to 14 percent was least helpful.

AFO: Have you got any projects in the pipeline you wish to highlight?

MK: Our focus now is to build resilience in industries, which the pandemic pointed us to. Kenya can forge the resilience of local industries by enhancing our local value chain, from raw materials to finished products. By doing so, we can shelter the manufacturing sector from industrial and trade risks arising out of external shocks. This way, Kenya can source raw materials and intermediate products locally, before turning to international markets.

We can also build resilient industries by supporting Kenyan-made products through public procurement, creating awareness on locally manufactured products and encouraging consumers to buy local.

Predictable and stable policy initiatives are also critical. This entails succinct fiscal and regulatory policies and initiatives that encourage investments into the sector. Increased investments will see local industry thrive and in turn create jobs and wealth for many.

AFO: Are you optimistic about the future of the manufacturing industry?

MK: We have identified 76 opportunities for investment and value addition through our Manufacturing Resilience and Sustainability Strategy: A Sector Deep Dive Report. Among them, the manufacture and supply of medical equipment, investments in adopting new technology, increased attention to developing local value chains to reduce dependence on imports, circular value chain, agroprocessing, regional leather value chain integration and packaging materials.

We are keen to see manufacturers take up these opportunities. As such, we shall continue engaging manufacturers to understand the bottlenecks hampering their uptake.

Furthermore, we will continue to engage the government on the overarching interventions needed to aid in the recovery of the manufacturing sector and economy, as businesses try to navigate different challenges brought about by the pandemic.

Kenya Association of Manufacturers Tel: +254 (020) 232481 info[@]kam.co.ke www.africa-log-prop.co.za