Kenya Manufacturing

Examining a growing sector with the Kenya Association of Manufacturers

Kenya is considered the economic and financial hub of East Africa, with a robust and diverse economy based on tourism offerings, agriculture, forestry, mining and more. Historically, the manufacturing centre has stagnated at around 10 percent of GDP, dipping to

7.7 percent in 2018. However, the government and private organisations (large and small) are aware of the manufacturing sector’s role in making Kenya an industrialised and competitive economy.

This renewed interest has resulted in plans and policies such as the Big Four Agenda, which seeks to increase the manufacturing sector’s percentage of overall GDP contribution to 15 percent by 2022.

Subsectors

Kenya’s manufacturing industry is diverse, comprising a variety of different sub-sectors such as automotive, metal and plastics. It also consists of both large businesses and SMEs, both of which have a part to play in economic development.

Food and beverage is the largest manufacturing subsector, which includes businesses manufacturing cocoa and confectionary from beans; dairies producing butter and milk; and distilleries and breweries manufacturing alcoholic beverages. Kenyan beer production has an annual turnover of $280 million, making it a significant contributor to the economy.

Other subsectors include apparel and textiles, including those that are handwoven and stitched. According to the CEO of the Export Promotion Council, Peter Biwott, there is an increased appetite for authentic Kenyan handicrafts.

“If you look at the export strategy, we have identified these items as having a huge impact on the country’s GDP since that is what many of our tourists are looking for,” he says.

This suggests that SMEs within the textiles industry and beyond have a key part to play in economic development.

Kenya’s Manufacturing Priority Agenda

Kenya’s Vision 2030 is to make Kenya a “middle income country providing high quality life for all its citizens by the year 2030”. It is shaped by President Uhuru Kenyatta’s Big Four agenda – food security, manufacturing, affordable housing and healthcare.

One aspect of this vision is the “Buy Kenya

Build Kenya Policy” – to increase competitiveness and consumption of locally produced goods and services. However, although the government have taken steps to enforce it, KAM is calling for greater interventions.

These include supporting SME development through the provision of affordable credit; increasing the resilience of the manufacturing sector by ensuring long-term policy stability; improving the ease of doing business and development of regional value chains to minimise exposure from external shocks and much more.

In line with Vision 2030, KAM created its Manufacturing Priority Agenda 2020 – “Establishing a competitive manufacturing-led economy for job and wealth creation”. It consists of five pillars, such as ‘government-driven SMEs development’ – which aims to enhance market and financial access for SMEs – and ‘competitiveness and level playing field’, which promotes access to reliable, affordable longterm energy, reduces logistics costs and provides an enhanced cashflow to manufacturers through addressing fees and levies, alongside incentivising prompt payments.