‘Made in Kenya’ is the spine of Vision 2030

 

A coffee farmer at work: Manufacturing will be the key to unlock the full potential of farming, the long celebrated backbone of the Kenyan economy when farmers can export directly from their villages. FILE 

By Nguru Kabugi

There has never been a better time to be a manufacturer in Kenya. The new governments are yet to come out with clear manufacturing policies and plans for the country and counties, but the message about value addition is already clear.

This and many other supporting and converging factors create an unmistakable picture. It is time to think manufacturing.

The good news is that the manufacturing space is not the preserve of large capital investors from the East or the West. Technology and systems now exist to enable a smart farmer group in Kisii to process and package locally available pineapples, put the ‘Made in Kenya’ label and sell to supermarkets in Mombasa or Russia.

Whether there are enough Kenyan entrepreneurs, community organisations and co-operative societies ready to play the manufacturing game is a different matter.

The biggest catalysts for manufacturing will be devolution and the county governments. Many of the county governments, especially the ones rich in agriculture, have loudly identified value addition as a next natural step to drive for faster economic growth.

Some are courting foreign investors. The central government, with the Vision 2030 programme, is also alive to the fact that value addition is a key cog in bridging the gap between the current economic circumstances and the promised middle income status.

Primary agricultural production is no longer sufficient to sustain the minimum required rate of growth. Therefore, the governments have no choice but to package attractive offers and incentives for would be manufacturers and processors to set up factories everywhere.

The demographic shift of Kenya’s population from being a predominantly rural to increasingly urban is a double-barrelled incentive for more manufacturing.

According to some estimates, Kenya’s population will increase to 63 million by 2030, by which time 45 per cent (30 million) will be living in cities and urban centres. This shift means more people will have better purchasing power, and secondly, people in urban centres have a higher affinity for manufactured goods, such as packaged food.

All leading supermarket chains in Kenya appear to be preparing for this urban migration, and are rapidly opening branches in towns and urban centres.

Manufacturing will be the key to unlock the full potential of agriculture, the long celebrated backbone of the Kenyan economy.

For many years, sales of products like coffee and tea have been characterised by heavy regulation, large millers and centralised systems, especially in packaging and marketing. This has created inefficiencies and loopholes, which have been exploited and abused by middlemen and gatekeepers.

The better alternative model is visible in the dairy industry, which has cottage industries jostling with large players in the market place. The New KCC and Brookside now co-exist with Palm House Dairies, Limuru Milk processors.

The result is a vibrant sector, double-digit growth over several years, and a bigger number of wealthier farmers. The same thing has happened to rice, now with tens of packaging companies where initially there was one miller.

Similarly, with the correct regulatory framework and incentives, a farmers’ coffee co-operative should be able to mill and pack its own coffee and export it, direct from the village factory.