Workers at Zingo Tannery. It is time to increase number of tanneries in
Kenya despite concerns from hides and skins exporters who might lobby
the Cabinet secretary to go slow on local leather industries. FILE
By George Wachira
In Summary
- Cabinet nominee has good opportunity to attract industrial investors.
This article is aimed at the Cabinet secretary nominee for Industrialisation Adan Mohamed,
who has a tough but interesting job ahead of him. I say tough because
many before him have not succeeded in re-starting the engine of
industrialisation which collapsed in the 1980s.
Prior to these years, the government of Jomo
Kenyatta had successfully implemented a coherent manufacturing policy
and strategy driven mainly by a push for imports substitution. It was a
strategy that equally targeted large scale manufacturing and
industrial estate level of industries.
There were specific financial institutions to fund
industrialisation and these included Industrial Development Bank (IDB)
and Industrial & Commercial Development Corporation (ICDC).
It is manufacturing, as opposed to export of
agricultural and mineral commodities that nearly always defines
sustainable economic successes of most nations. However, a nation
requires successful agriculture and mining sectors to support
industrialisation.
For Mr Mohamed, it is his colleagues in sectors
like agriculture, livestock and mining who will determine the pace and
quantum of his success. They will be in charge of sectors with the
highest capacity and opportunities for manufacturing value addition.
However, there are potential quick hits that can
be realised in other areas of manufacturing like vehicle/equipment
assembly and manufacture of basic household consumer items.
This category of manufacturing will be attracted
by a presence of sustainable market demands; sufficient infrastructure
and energy; security; and of course an enabling fiscal and regulatory
environment.
It will be the cabinet secretary main task to
market Kenya as a destination that can attract and accommodate private
industrial investors.
Allow me to recite some lost history in my county
of Nyeri. There was in 1940s a large vegetable processing and packaging
factory at Karatina. An integrated project had been set up by the
colonials in the then Mathira Division to grow, process and package
vegetables to feed the Second World War armies across the world in the
1940s.
To supply this factory with vegetables, there was a
very elaborate irrigation system with a matrix of dams and canals some
of which still exist to this day. Feeder roads were all weather, while
the adjacent rail station ensured fast shipments of processed materials
to Mombasa for dispatch to the war zones.
When the “Young Turks” from Nyeri returned from
the battlefields of Burma, they politicised the venture and the factory
was subsequently re-located to Naivasha.
However, Karatina has to this day retained the
legacy of one of the most industrious vegetable farming centre in Kenya,
perhaps waiting for a similar value adding vegetable factory.
Similar stories of lost agri-manufacturing
opportunities abound across Kenya. Cotton that fed textile mills in
Kisumu, Thika and Eldoret; pyrethrum crops that supplied a first class
pyrethrin manufacturing factory in Nakuru; a leather industry at Thika
supported by raw hides and skins; sisal farming that kept a large bag
and cordage factory busy at Juja; maize farmers who supplied feedstock
to a successful corn products industry at Eldoret to produce starch and
syrup among other products; and sugar factories that have barely
expanded their capacity since the 1970s.
The list is long, but the implications are that we
need not look very far for where to commence the agri-based
industrialisation journey.
Let me now turn to the mining sector which can be a
critical cog in industrialisation. With a dedicated Ministry of Mining,
it is expected that Kenya shall identify and develop many mineral
resources.
Exporting and pricing of mineral ores is a very
opaque area where one is never quite sure of the best possible value for
the country.
There will be need to think twice before we accept
that export of ores is the best possible option and value for Kenya as
opposed to local processing followed by exports of secondary or final
goods.
With confirmed iron ore resources in Kitui,
Tharaka Nithi, and Taita-Taveta counties and large coal deposits in
Kitui, it will be a priority for the cabinet secretaries of mining and
industrialisation to set up institutional structures to support a steel
making industry. Regional and export demands for steel are there.
In Addis Ababa, there is a street that is famous
for its beautiful gold jewel ornaments. This is an SME type of industry
that adds value to gold and earns foreign exchange from tourists.
It would be useful for the two secretaries at
mining and industrialisation to divert some of the gold mined here to
support local small scale industries that can add value to the gold and
support tourism.
When commercial quantities of oil and gas are
confirmed we should establish how best to add value to these
hydrocarbons. Local refining, fertilisers, and petrochemicals should be
industries that target the petroleum sector.
For Mr Mohamed, there will be many hurdles in the
form of vested interests and lobbies. There will be importers of
petroleum products and fertilisers who will try to convince you that it
is uneconomic to sustain refining and fertiliser industries.
The supermarket importers will argue that Kenya
cannot manufacture to high standards. The hides and skins exporters will
lobby you to go slow on local leather industries.
The second-hand clothes importers will argue that
Kenyans cannot afford new locally made clothes. Mining interests will
come up with stories that Kenya has no technology, nor enough energy to
add value to minerals.
Best of luck in industrialising Kenya. It can be done and it must be done.
Mr Wachira is the director, Petroleum Focus Consultants.
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