Interview : Peter Munya
How great a role will the manufacturing sector play in the future of the economy?
PETER MUNYA: In recent years, a lot of emphasis has been placed on the goal of moving away from a commodity based economy to a more value-added development model. Kenya aspires to build global businesses, focusing on sub-sectors in which it has a competitive advantage and where there is potential for increased efficiencies. The manufacturing sector has a strong role to play in this, but the country intends to also keep adding value to the agriculture sector, including key crops such as avocado, pineapple and nuts – especially macadamia – as well as leather, dairy and other animal products. Infrastructure development and government services will continue to play an instrumental role in the development of our industry, and the public sector will remain an important investor.
Additionally, the emergence of technology-based solutions will play a relevant part in the future of our economy. Once this is in place, the shift from agriculture to value-added manufacturing and technology-based industries will be more visible.
What are the main challenges facing the industry?
MUNYA: Even though Kenya has one of the most qualified and committed workforces on the continent, some issues remain. Specifically, there is a relative mismatch between existing skills and the requirements of the labour market. The country has put in place specific training programmes and made considerable investments in technical and vocational institutes that are going to be based in every constituency. A considerable number of young people are joining the textile industry and will acquire on the job skills to build on and develop. Nevertheless, access to capital and power has been an issue, especially for heavy industries. However, an important number of investments have been made for energy supply expansion, and the aim is to locate industries in areas where the cost of energy is low.
In what ways can small and medium-sized enterprises (SMEs) be better integrated into the value chain?
MUNYA: SMEs are very misunderstood, and developing policies to assist them can be quite complex. Nevertheless, they are poised to become one of the biggest engines of growth for the economy in the coming years. A very relevant issue is the extent to which bigger businesses can contribute to providing support and market access to these smaller players.
The government is providing support by creating opportunities for market access and committing 30% of public procurement to SMEs. Furthermore, the new Companies Act of 2015 predominantly targets small businesses and has removed and simplified requirements for SMEs, in a manner that is more consistent with the nature of their operations.
How would you assess the attractiveness of Kenya to international investors?
MUNYA: Foreign investors are driven by common criteria, in that they look for an environment with controlled or minimised risk, as well as areas with returns superior to the next best alternative. They also look for the availability of inputs – such as labour and raw materials – as well as access to markets.
The country has made significant progress in addressing these issues by taking into account the political and macroeconomic risks associated with our market. It is clear that in Kenya the rule of law and the constitution prevails. In addition, it is evident that the macroeconomic environment is stable and separated from any political developments.
Kenya also has a favourable business environment with a good position in the World Bank ease of doing business index when compared to other developing countries. Furthermore, a great deal of progress has also been made when it comes to addressing one of the key challenges that the country has faced in the last decades, namely underinvestment in infrastructure.
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