Kenya far from meeting global market demands

Wednesday, September 9th, 2020 00:00 |
Economic growth. Photo/Courtesy

Mucai Kunyiha

If you start a business growing vegetables on your farm and take them to market, you soon come to realise that there are other farmers, who are targeting the same market with their vegetables.

The quantity, quality and size of the vegetables will determine the market price and you will have to start figuring out what you need to grow to continue successfully in the market.

The ability to do this in a sustained and successful manner is what is referred to as competitiveness.

Just as a vegetable farmer, Kenyan manufacturing participates in a global marketplace, competing against local, regional and global manufacturers.

In manufacturing terms, a country’s industrial competitiveness has been defined as ‘the degree to which a nation can, under the free trade and fair market conditions, produce goods and services that meet the test of international markets, whilst, simultaneously maintaining and expanding the real income of its citizens’.

The United Nations Industrial Development Organisation (UNIDO) and Kenya Association of Manufacturers (KAM) led a discussion on the recently launched Competitive Industrial Performance (CIP) Index 2020.

Its findings on Kenya’s competitiveness are grim – ranking 115 out of 152 countries.

Why do these global indices matter one might ask? First, it allows us to identify our comparator and competitor countries.

Whereas Kenya was slightly ahead of its East African partners - Tanzania (123) and Uganda (128), when benchmarked against other countries within our category of ‘other developing country’, we find that Eswatini (formerly Swaziland) (83), Botswana (89), Namibia (97) and Congo (101)are amongst another 10 sub-Saharan countries that rank ahead of Kenya. 

Second, the index is a guideline pointing at the key areas countries need to focus on to progress their manufacturing agenda.

Different countries have the opportunity to pick their own strategies that are fitting and appropriate from their current starting point and to fit the resources and opportunities at their disposal. Herein lies our opportunity.

The CIP Index covers three main dimensions, the capacity to produce and export manufactured goods, technological deepening and upgrading, and world impact.

The capacity to manufacture and export refers to our ability and record in actual value-added production.

If we continue with the vegetable illustration, we could ask how many types of vegetables you grow, the quantity and quality produced per hectare.

Further value addition would include packaging into sacks for delivery to a wholesale market, or perhaps you could pack into trays for supermarket shelves.

The CIP Index also looks at our ability to move into high value addition and inculcate technology into various sectors of industry, improving the quality and positioning of our output on a global stage. 

Kenya’s performance on the technology front was very low with 78 per cent of manufacturing being resource-based or low technology.

Medium technology manufacturing was 16 per cent and high technology manufacturing only 5 per cent of overall manufacturing.

Moving to medium technology would be manufacturing the equipment and machinery for the various processes e.g. tractor parts, sorting and packing machines.

High technology manufacturing would include RFID systems to track and trace, laboratory equipment to analyse the vegetables for nutrients etc.

The UNIDO report signals that we have a lot to do in our journey to grow as a manufacturing nation.

It also gives us some suggestions on the key areas we could focus on to move the needle.

If we are thoughtful, persistent and consistent in our manufacturing strategy we can progress. — The writer is the Chairman of Kenya Association of Manufacturers — [email protected]

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