Industry Principal Secretary Dr Juma Mukhwana has called on Kenyans to invest in the country’s manufacturing sector, saying it has potential to drive industrialization and economic prosperity.
Dr Mukhwana indicated that the State was encouraging local and foreign investors to venture into the lucrative sector through the use of common manufacturing facilities being set up by the government at County Aggregation and Industrial Parks (CAIPs).
While expressing concern that manufacturing was often overlooked by the majority of Kenyans, posing a challenge to the country’s industrial future, the PS said investments in manufacturing would reduce Kenya’s reliance on imports, create jobs, and foster prosperity.
Speaking in Nakuru, Dr Mukhwana explained that to lower manufacturing costs, the government had initiated programmes to build industrial spaces on public land, established an industrial fund, and promoted locally made goods.
The PS cited Dongo Kundu, Naivasha, Thika, and Eldoret as some of the established new special economic zones, a move he said was aimed at branding Kenya as a manufacturing hub for Africa and the world.
He said the Ministry was promoting sustainable and fair linkages between raw material producers (farmers) and industry and developing policies, strategies, and regulations to support manufacturing through CAIPs where the country was introducing low–cost manufacturing (on government land) in the counties and also bringing into the sector many small-scale manufacturers.
Dr. Mukhwana indicated that the construction of the multi-billion Nakuru County Aggregation and Industrial Park (CAIP)at Ngongongeri Farm in Njoro Sub-County aimed at transforming the Central Rift region into a major commercial hub, had finally kicked off and was expected to host a variety of industries, including ICT hubs, energy-sector companies, engineering and construction firms and chemical industries.
He added that the industrial park will also have all the support infrastructure such as power, water and the park ring road ready within three months, after which the investors will be immediately allocated space and allowed to operate, as the spatial plan was in place.
He explained that the Nakuru CAIP would cost a total of Sh500 million with the National Government having already disbursed Sh116 million, while the County Government pumped in Sh250 million.
Additionally, the PS said the government was in the process of building eight industrial shades for small scale manufacturers in Njoro Sub-County.
Other counties identified for the first phase of the project include Busia, Murang’a, Kakamega and Kirinyaga.
“While taking up 17 percent of the world’s population and a manufacturing of 3 percent, Africa is punching below its weight, compared to Europe, which takes up only 9 percent of the World population and a manufacturing of 25 percent,” regretted the PS.
Dr Mukhwana however assured that the African Export-Import Bank (Afreximbank), Africa’s trade development bank, had ratified a series of initiatives designed to support Kenya’s industrialization and export-led development agenda with the bank expected to extend Sh30 billion to finance the development and operationalization of industrial parks and Special Economic Zones (SEZs) to bolster the country’s industrialization and export manufacturing.
The Principal Secretary said the government was also promoting sustainable linkages between raw material producers and industry, developing policies to support manufacturing through CAIPs, and encouraging small-scale manufacturers to enter the sector.
“This, coupled with entry into the Kenyan manufacturing space by a large number of individuals, both citizens and foreigners, is slowly tilting the country to become a manufacturing hub for Africa and possibly for the world,” added Dr. Mukhwana.
The Principal Secretary noted that the country has also finalized an Economic Partnership Agreement (EPA) with the European Union, allowing duty-free access to 27 EU countries.
He stated CAIPS and Special Economic Zones (SEZs) will help grow industrialization and middle income to provide quality life to all residents by 2030 in a clean and secure environment.
The National Government has set aside Sh4.7 billion for the construction of CAIPS in counties to promote manufacturing with the counties also committing a similar amount to the project which is a partnership between the regional governments and the Ministry of Investment, Trade and Industry.
Each county is expected to contribute Sh250 million and provide a minimum of 100 acres of land for the establishment of the Parks towards the implementation of the project in the next financial year. This will be used to fund the provision of electricity, water, effluent management, internet, security and common transport.
There will also be an online portal through which traders will find markets for their products, both locally and abroad.
Dr Mukhwana had earlier elaborated that the project will be implemented in two phases adding that once the parks are constructed, Equity Bank will provide Sh250 billion to support the purchase of manufacturing equipment for industries willing to invest in the parks.
The Principal Secretary said the government will also establish a Sh6 million fund to provide start-up capital to small-scale traders and youth under a programme dubbed “Viwanda Mashinani,”
He said that to lower manufacturing costs, the government has initiated programmes to build industrial spaces on public land, established an industrial fund, and promote locally made goods and highlighted the establishment of new special economic zones in areas such as Dongo Kundu, Naivasha, Thika, and Eldoret as part of efforts to brand Kenya as a manufacturing hub for Africa and the world.
The Chief Executive Officer of the Export Processing Zones Authority (EPZA) Richard Omelu said the CAIP project will transform lives across all the 47 counties.
“We aim to attract investors and create job opportunities to ensure the local population benefits from this initiative,” he stated.
Omelu indicated that EPZA was running six projects in the country that had created 82,000 jobs directly adding that the initiative was projected to create 5,000 new jobs in Nakuru, Machakos, Uasin-Gishu, Busia, Kirinyaga, Muranga and Kwale counties.
He indicated that suitable infrastructure was expected to attract investors, state support, arrangement of logistics, and introduction of new technologies in the agricultural activities and the creation of a competitive environment.
The establishment of industrial parks is part of Kenya’s industrial transformation programme which was launched in July 2015. The country has 15 gazetted SEZs, which form part of the ambitious plans to create thousands of jobs and boost exports to spur economic growth by 2030.
In Africa, Kenya has the largest number of SEZs with 61, ahead of Nigeria, South Africa and Ethiopia. However, these have not really taken off owing to the lack of a coherent policy.
Omelu revealed that Kenya was envisioning CAIPS and SEZs that will host light industries such as warehousing and logistics and supporting industries, medium and heavy industries such as manufacturers of fertilizers, iron and steel, plastics and packaging, and fabricated metal products.
He added that it would also create jobs, reduce post-harvest loss, connect counties through Commodity Exchange (KOMEX) and Warehouse Receipting.
This comes at a time when Kenya has set a cheaper power tariff of Sh10 per unit at the 15 special economic zones. The zones are spread across Naivasha, Mombasa, Kisumu and Machakos.
The tariff is the lowest rate per unit of power across all the consumption bands under the new regime, highlighting the State’s resolve to improve the investor climate in the face of increasing competition from countries that offer investors cheap electricity.
Nakuru Deputy Governor David Kones urged residents to cooperate with the county and national governments to maximize the project’s benefits.
Kones observed that if prioritized through proper funding and complete execution, CAIPs and SEZs will transform Kenya’s economy by creating thousands of jobs while improving its global market position, noting that Kenya’s economy had relied heavily on agriculture and services for years, yet industrialization remains the missing link.
Manufacturing represents 7.6 per cent of Kenya’s GDP, much lower than that of nations with established industrial systems. Due to the low establishment of local industries, the country has developed too much dependence on foreign imports, which generates trade deficits and restricts employment opportunities.
Through the CAIP initiative, Kones affirmed that counties attains increased economic power to foster local development among multiple industrial locations. The industrial parks he added could operate as manufacturing centres and innovation centres that optimize resources based on specific county assets.
By Esther Mwangi
