Manufacturing sector prepared to deliver

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BY BETTY MAINA

It has been a long drawn out battle for local manufacturers to sell more of their products locally. An increase in market share is possible if they can gain access to the local public sector market, make more inroads in the private sector market and change the attitude of consumers to local goods.

Light shone at the end of the tunnel for manufacturers in last year’s budget presentation when ‘Buy Kenyan, build Kenya’ concept was launched.

While the initiative is very good, a number of problems in implementation arose and that is why it is necessary to have the Buy Kenya, Build Kenya Policy to guide procurement in the country.

Manufacturers have been particularly concerned about the implementation of the preference and margins of preference that have led to a certain category of persons being awarded Government tenders without an audit of the source of goods and services.

This has led to an influx of imports into the country. The Public Procurement and Asset Disposal Bill, 2014 if passed, will hopefully fix some of these problems which have beleaguered us for the past one year.

Sourcing local inputs can expand value addition chains and lead to more job prospects for the youth through more absorption of people into the job market or through the establishment of SMEs if linkages are made with established companies.

So far, the timber sector at the Kenya Association of Manufacturers (KAM) estimates its usage of 35 percent local material content while the building and construction sector puts its value addition at 82 percent while it uses 40 percent local content.

A study done recently by Toyota EA on the preparedness of manufacturers of automotive parts contained in Completely Knock Down Kits (CKDs) used by local motor vehicle and motorcycle assemblers is telling. While Kenya lagged behind Egypt and Pakistan, performance in comparison to other similar companies shows there is local capacity to make tyres, seats and interior parts, exhaust pipes, rubber parts, filters, wire harness and glass.

The labour force in this area is also highly skilled. Problems still exist of course, but these results are very promising for the growth of the sector.

The construction of the Standard Gauge Railway (SGR) also presents very many opportunities especially for the cement manufacturers if one takes into account that cement is 100 percent wholly local content and value addition. Cement to construct Thika Road should never have been imported since we had all the necessary materials locally.

This opportunity cost the local sector and the experience should not be repeated in future government projects. The move to work on a PPP model on the railway is promising for manufacturers but it is important to lock in the details quickly so as to avoid losing out.

Another initiative that could also see the growth of the local manufacturing sector is the push for a Natural Products Industry (NPI) which could bring in annually up to Sh100 billion and create 500,000 jobs if the sub sector harnessed properly. This industry would make use of substances produced by living organisms including plants, animals and microbes for the benefit of human beings.

There is growing worldwide interest in this area and as an organic agricultural economy, the country stands to gain by coming up with the proper regulations for this sector. All that the local manufacturing sector needs is an enabling regulatory environment, to unfurl its wings and fly.

(The writer is the chief executive of Kenya Association of Manufacturers and can be reached on [email protected])

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