Kenya bets on cheaper power, infrastructure to revamp industries

Industrialisation CS Adan Mohamed, with Kenya Association of Manufacturers CEO Phyllis Wakiaga at the KICC, Nairobi, during the launch a public-private sector-led manufacturing milestone report on November 16, 2016. PHOTO | SALATON NJAU  

In Summary

• Industrialisation secretary Adan Mohamed says efforts to revive sector that has been stagnant for over a decade are in high gear.

By BRIAN NGUGI, bngugi@ke.nationmedia.com

Kenya is betting on cheaper electricity and infrastructure costs to revamp the manufacturing sector, which has remained stagnant over the past decade and reverse the exit of major industrialists.

Industrialisation secretary Adan Mohamed on Wednesday said the push for cheaper electricity, construction of a new railway, roads and Mombasa port expansion as well as the upgrade of technical schools for craftsmen is meant to ease doing business.

Industries such as Eveready East Africa and tyre manufacturer Sameer Africa have pulled the plug on their businesses in Kenya.

The government wants to make Kenya a cheap market as it competes with countries like Egypt and South Africa for industrialists and raises the sector’s contribution to GDP by 20 per cent.

“A significant amount of imports come into the country, probably three times the amount of exports, and that is a factor of many things not being produced here. Some of them are things we will take a bit of time to manufacture but we are building a road map to ensure we get there,” said Mr Mohamed in Nairobi.

A lot of multinationals are consolidating their production in cheaper markets.

Rickety infrastructure, high energy costs and a small base of workers with technical skills to work in plants have dimmed Kenya’s industrial sector and cited among factors behind relocation of manufacturers to other countries.

These bottlenecks are being tackled, said Mr Mohamed. Tariffs paid to Independent Power Producers (IPPs) will be reviewed in a fresh effort to lower the cost of electricity.

The Energy ministry on Tuesday named a task force that will review Power Purchase Agreements (PPAs) between Kenya and electricity generators to eliminate contracts burdening consumers.

READ: Task force named in bid to tame high cost of electricity

Kenya has embarked on major infrastructure projects to make up for decades of under-investment which stunted economic growth.

It has announced plans to build 10,000 kilometres of paved roads and construction of a new railway that will eventually link Mombasa to Uganda.
The railway will ferry heavy containers faster and at less than half the current freight costs.

Mr Mohamed said the Buy Kenya Build Kenya policy, which seeks to promote the purchase of locally produced goods by government departments, will be strictly enforced to create a market for local industries.

He spoke ahead of the Kenya Manufacturing Summit and Expo, which is expected to be opened today by President Uhuru Kenyatta.

KAM chief executive Phyllis Wakiaga said the expo, bringing together over 120 manufacturers, seeks to showcase locally manufactured goods.