Interview: Phyllis Wakiaga
What sort of regulatory reforms might help Kenya stimulate investment in manufacturing?
PHYLLIS WAKIAGA: This year we had the pleasure of being recognised as the third most reformed country in the World Bank’s ease of doing business index for 2017. This showed that some of the steps we have made as a country have indeed helped in our efforts towards creating a nurturing environment for industry. Thanks to the Ministry of Industry, Trade and Cooperatives we have been able to retain our appeal as a top investment destination in Africa. From here we can only speak of what we can do to advance to the next level and build the infrastructure for future industry.
During the launch of our Manufacturing Priority Agenda 2017, we highlighted the need to promote local manufacturing to make Kenya the exports centre for East Africa. To this end, we have been working with the government on the “Buy Kenya, Build Kenya” initiative, and we have seen the leadership’s goodwill in making this happen. Granted, we need more reinforcement when it comes to implementing the policy, but we are certain that we are going to achieve this. The government has also created incentives for local and foreign investors, such as the industrial park in Naivasha and special economic zones that will secure the future of industry and investment for our country.
What steps need to be taken to reduce high input costs for domestic industries?
WAKIAGA: The growth potential of the industrial sector is hampered by constraints that affect the ability of Kenyan products to compete in the global market. These include the high cost of electricity, an unequal playing field in the EAC, competition from fake and substandard goods, lack of proper market access for our products and poor uptake of locally manufactured goods. In partnership with the government and other stakeholders such as the Business Advocacy Fund and the World Bank, KAM is working to develop taxation and fiscal policies to promote export competitiveness. Our competitiveness needs to be enhanced through an export-oriented strategy which will ensure that our manufacturers gain from East Africa’s burgeoning population and infrastructure developments. County taxes within Kenya also need to be streamlined to eliminate multiple regulations that ultimately add to the cost of doing business. Moreover, we are not yet where we want regarding the cost of electricity. With a major component of the energy mix being from renewable sources, the cost of energy in Kenya has since dropped from $.19 per KWh to $.15 per KWh in 2017. Thanks to government efforts, Kenya is now one of the top 10 world’s largest producers of geothermal energy.
How can the Kenyan industrial sector position itself to benefit from increasing EAC trade?
WAKIAGA: The results of a well-integrated region will strengthen the business sector through increased trade, job creation, economic growth and ultimately poverty reduction. KAM first introduced an initiative of working together to develop a common voice in 2010 through the EAC business network which worked towards attaining a business friendly EAC and a common market. The network endeavoured then to facilitate a pro-business implementation of common market protocols and worked towards promoting a business environment within the EAC.
The EAC Industrialisation Strategy (EACIS) 2012-32 is a clear commitment by the EAC member states to encourage trade within this region. The EAC Summit directed the EAC Secretariat to formulate an industrial development and investment strategy supported by an effective decision-making framework, aimed at promoting equitable industrial development in the region. After months of consultations with civil society organisations and key stakeholders at regional, national, public and private levels, the EACIS 2012-32 was prepared and approved by the summit in 2011.
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