Kenya has announced plans to revive small industries across the country, in a bid to spur value addition and market access for targeted products through projects led by the youth.
The Trade, Industrialization and Enterprise Development Principal Secretary Kirimi Kaberia said the ministry has completed mapping out villages and their unique products countrywide, according to Business Daily.
According to the PS, the Ministry is looking to attract more youth into manufacturing through cottage industries.
Kaberia said the government’s plan is to have functional industries in the next 12 months through transfer of resources in the rural areas.
“We want to have an environment where local people consume what they produce,” he said.
The plan, dubbed ‘one village, one product’, is part of Kenya’s Vision 2030.
Why Kenya’s manufacturing is uncompetitive
It is also part of the government’s plan of growing the contribution of the countries manufacturing to GDP from 11 percent to 20 percent.
The announcement by the Ministry of Trade comes amid calls by manufacturing small and medium enterprises asking the government to harmonize laws, policies, regulations and standards governing their operations, at the national and county levels.
KAM Manufacturing SME Hub Chair, Ciiru Waithaka, said the numerous regulations and arduous regulatory regimes make it difficult to invest in Kenya.
Waithaka said when effectively implemented, regulations create an enabling environment for competitiveness by enforcing fair business practices, driving equal opportunity and inclusive participation of all in the economy.
“However, when overdone, the end goal is a zero-sum game. It stifles Manufacturing SMEs’ growth, and reduces their competitiveness and productivity at the local, regional and international markets,” she said.
Waithaka said that for any investor, policy and regulatory predictability and stability are paramount, adding that predictability and stability lead to investor trust, which is essential for making sound decisions on scaling up their businesses and in investing in new markets.
“National and county governments should prioritize the involvement of manufacturers whilst formulating laws, regulations and policies. By doing so, the laws, regulations and policies will be industry-centred, in turn, support competitive industrial development.”
At the same time, the Director for Enterprise Development at the Ministry of Industrialization, Trade and Enterprise Development Nancy Muia said the Kenyan government remains committed to drive SME growth.
“As government, we continue to promote value addition, develop and implement policies to aid in SME development such as the Local Content Policy, promote foreign direct investment in industry as well as establishing special economic zones and industrial parks,” she said.
“Additionally, we have also established various funds, to support SMEs. We have SME Support centres across the country, to enhance their access to information, and enable them to understand Government initiatives.”
Their sentiments come against the backdrop of a survey conducted by Kenya Association of Manufacturers (KAM) and KPMG which found that 18 percent of Kenyan manufacturers experienced a reduced sales turnover of more than 30 percent, attributed to a fall in demand for products by consumers.
The “Impact of the COVID-19 Pandemic on the Manufacturing Sector: One Year On,” study also found that the Food and Beverage, Automotive and Textile and Apparel Sectors experienced the most reduction in their turnover, at 15 percent, 12 percent and 12 percent respectively.
27 percent of surveyed firms operated below 50 percent production capacity, in comparison to 55 percent of the surveyed firms in 2020.
Meanwhile, the automotive, plastic and rubber sectors were the most affected.
According to the report, other challenges facing the manufacturing sector, one year on, are the weakening Kenyan shilling which drives up the cost of importation, increased cost of doing business because of logistics and the high cost of raw materials and intermediate products.
The report reported that one year down the line, improving cashflow remains a top priority for 67 percent of manufacturers with 65 percent looking to increase their market share. Another 65 percent is looking to reduce costs.