An Update On Kenya’s Industrialization Strategic Plan

29th January 2010

The Economic Pillar of Kenya’s Vision 2030, identifies manufacturing as one of the key sectors that will help achieve the immediate objective of 10 per cent rate of growth per annum by 2012 (from 6.2 per cent in 2008), create jobs, generate foreign exchange and attract investment. Kenya aims to transform itself into an industrialised middle income country by 2030 and the Strategic Plan, launched in January 2010, outlines the direction for five years and the core objectives for meeting the industrialisation goal of the Kenya Vision 2030.

The driving principles of the Plan will be supporting Micro, Small and Medium Industries (MSMs) and focusing on making the industrial sector competitive, through local capitalisation; enhanced value addition; improved product quality, certification and branding to international standards. Additionally the plan provides for attracting investment, adopting Research and Development findings and modern technology; and the continuous innovation in product/service development and practices.

The Strategic Plan’s key policy outputs include the development and implementation of the Anti-Counterfeit Goods Act; National Industrialisation Policy; Industry Property Rights Policy; Investment Policy; National Incubation Policy and the Industrial Master Plan.

Policy Outputs

Some of the strategies proposed in the 2009/2010 budget to support the industrialisation process include:

· Removing the Sugar Development Levy on refined industrial sugar imported by gazetted manufacturers under the duty remission scheme.

· Granting exemption of import duty on all industrial spare parts which will be managed through the duty remission scheme, so as to encourage industrial growth and reduce the cost of manufacturing.

· Remitting all import duty on raw materials for the manufacture of sanitary towels to make them cheaper and available locally.

· Granting a remission of duty on inputs for use by paper and paperboard mills.

· Boosting the textile industry and cotton sector in order to create employment and export earnings. This will be done by reducing import duty on all synthetic yarns, acrylic yarn, polyester yarn and high ferocity yarn from the current rate of 10% to 0%. & a proposal to zero rate VAT on locally produced and ginned cotton.

Challenges:

Include: insecurity and lack of cohesiveness; democracy and the rule of law; rising oil and food prices; unemployment; counterfeit goods and Non-Tariff Barriers (NTBs).

Plan of Action:

  • Construction of second port at Lamu and development of a modern rail network. Note: already the introduction of a 24-hour service at the Port of Mombasa has increased the turnaround time for ships and enhanced clearance of cargo.
  • The Kenya Investment Authority (KenInvest) is developing a One-Stop-Shop (OSS) for investors. The Registrar of Companies has computerized the business registration process.
  • Recent launch of E-Government Service and a text messaging system to enable the public to access and query how the Government is delivering services.
  • The Anti-Counterfeit Goods Act was enacted to curb the flow of substandard, counterfeit and contraband goods. An Industrial Master Plan has been developed and arrangements are underway to develop the National Industrialization Policy and the National Incubation Policy.
  • Plans to develop two Special Economic Zones and at least five Small and Medium Enterprises (SME) Industrial Parks. One Special Economic Cluster (SEC) will be set up in Mombasa to allow for easy importation of necessary raw materials and exporting of finished goods, with a second in Kisumu to allow for access to regional markets and exploit the available agro-processing potential along the lakeshore.
  • Five SME Industrial Parks, one in Nairobi; a pilot agro-processing SME park at Eldoret, (for local agricultural area and access to an airport) ; a third agro-processing SME park for processing fruit juices and vegetables oils in Mombasa; one in Kisumu for processing of vegetables, horticulture, fish and fruit processing; the fifth at Nakuru for meat processing (with tannery) in a disease free zone.
  • It is estimated the Ministry of Industrialization will require Kshs.53 billion to implement its Strategic Plan. The Government will partner with the private sector as well as development partners in order to raise the resources required. Some of the Public-Private Partnership programmes include; the Business Sector Programme Support (BSPS) with support from DANIDA; MSME Competitiveness Project with support from the World Bank; Kenya Integrated Project II with support from UNIDO; One Village One Product (OVOP) with support from JICA.

AML

January 2010