Adopting green strategies can help revitalise manufacturing

Roses in a greenhouse. Industry players say punitive taxes are making the horticulture industry uncompetitive in the global market. PHOTO | FILE |  NATION MEDIA GROUP

Deputy President William Ruto and his lead Lawyer Karim Khan at The Hague on September 17, 2013. ICC prosecutors want to continue the trial using statements witnesses gave before they withdrew. Kenya wants the court's general assembly, meeting in The Hague this week, to declare that illegal. PHOTO | FILE

By Adan Shibia

In Summary

• To address policy concerns of youth of unemployment and underemployment, a vibrant manufacturing sector is imperative.

As we celebrate the 26th Africa Industrialisation Day Friday, policy makers across African countries must restrategise to resuscitate the industrialisation process that has been lagging behind.

Undoubtedly, the industrialisation plays a catalytic role in economic growth, employment and holds the promise of achieving sustainable development goals (SDG).

Successful industrialisation process has been mainly driven by manufacturing sector through value addition, which spurs export growth and hence increases employment.

To address policy concerns of youth of unemployment and underemployment, a vibrant manufacturing sector is imperative.

The manufacturing sector in Kenya accounts for 10 per cent of Gross Domestic Product (GDP) and 12 per cent of formal sector employment. The 10 per cent GDP contribution is below the GDP contribution of Malaysia and Korea at 24 per cent and 30 per cent respectively. These differentials reveal a contrasting development narrative of the three countries that were contemporaries in the 1960s.

On one hand Malaysia and Korea aggressively pursued an export strategy that was anchored in the manufacturing sector. Over 50 years later both Korea and Malaysia enjoy a vibrant manufacturing sector with remarkable GDP per capita compound growth of 12 per cent and seven per cent respectively.

The launch of SDGs that embody sustainable industrialisation and inclusive economic growth is likely to revitalise the manufacturing sector.

The SDGs set new universal goals, targets and indicators that the United Nations member states are expected to use to frame their development agendas over the next 15 years.

With launch of the Vision 2030 development blueprint in 2007, Kenya prioritised industrialisation as the path to inclusive growth and employment generation. Public investments in infrastructure and energy position Kenya on a trajectory of reducing costs of production.

The enactment of Special Economic Zones Act establishes and operationalises the Special Economic Zones (SEZs) which embodies a host production cost reduction incentives such as physical infrastructure and fiscal measures. Other notable initiative includes Kenya’s Industrial Transformation Programme aimed at accelerating Kenya into an industrial hub.

In conclusion, sustainability of industrialisation calls for accelerated efforts towards efficient use of resources across the value chain. However, granted that the products market tend to be inefficient the government should embrace the initiative of green economy to mitigate production cost attributable to negative externalities.

Such an initiative would be vital for micro and small enterprises in lowering costs of production, sustained growth and access to markets.

The writer is a policy analyst at Kenya Institute for Public Policy Research and Analysis (KIPPRA)