Mining                                                        Photo courtesy

Industrialization significantly contributed to the growth and development of the western countries.  For example, North America, Europe, Japan and the East and South Eastern Asia, and South America have joined the league of industrial nations. These countries have recorded robust growth in productivity, manufacturing and growth in real estate growth.

The result of this development is the high quality of life enjoyed by the industrialized nations characterised by higher GDP growth, low levels of unemployment, high income per capita, and very low levels of poverty. It follows therefore that, results reflect more convincing reasons for these countries to celebrate industrialization by showing the benefits there from.

Although some transformation is taking place In Africa, the process has been slow and is taking much longer.  There are three primary reasons that underlie this slow progress. 

First, African economies have predominantly remained exporters of raw materials and primary products.  From the Zambian Copper Belt to the rain Forests of the DR Congo and Equatorial Guinea, the oil wells and mineral deposits in Nigeria, Sudan and Tanzania, the sugar growing areas of Natal (SA), the Kingdom of Swaziland to the agricultural produce in Kenya and Uganda all have remained exporters of primary products.

A comparative analysis of Africa and South-East Asia reveals that the latter is characterised by strong growth over the last three decades. They are competitive and command a strong position in world trade. They started off as exporters of raw materials and became dominant pillars in world trade focussed on high technology goods in about 20 years.

Secondly, the economic relationship between the developed countries and Africa is in such a way that it sustains the supply of their industrial raw materials from Africa, while at the same time using the continent as the market of the industrial and manufactured products. More recently, the latter has degenerated to second-hand products. Consequently, African economies have found it extremely difficult to get out of this situation.

Thirdly, the design of infrastructure especially rail and air all aimed to evacuate raw materials from the continent hence the absence of proper inter-state connectivity after years since independence. 

This background becomes clearer when superimposed on the conduct of the current world trade regime, especially the WTO negotiations currently under suspension and even the Economic Partnership Agreement with European Union.  The primary source of divergent of views between Africa and the developed countries in the WTO and other trade negotiations, is the desire of the former to make a breakthrough in addressing the real development needs as in supply side issues including capacity in productive capacity, infrastructure, increased production and value addition on the one hand and the reluctance of the former to give concessions on the same.

We should be cognisant of these facts and realities.  But we also need to congratulate early efforts in Kenya such as the creation of affiliated commercial and industrial institutions that have supported a relatively strong industrial base in the country.  This has made Kenya to have a competitive advantage in EAC and COMESA region.  We must, however, push beyond comparative advantage and ensure we enter the competitive edge.  The benefit of this strong industrial base can be seen in Kenya’s leadership in export of manufactured products in the COMESA market.  It is important nonetheless to recognize that according to the Country Assessment Study (CAS) done by the World Bank in 2003 50% of installed industrial capacity is underutilized.

In 2000, manufacturing value added products accounted for between 34 and 35 per cent of the GDP for Korea, Malaysia, Thailand and China compared to 10.3 per cent for Kenya. The Asian tigers export products that can compete anywhere in quality and price.  They focused on value addition and took advantage of imported technologies while also investing heavily on human resource development. This conference is called upon to take note of where we are as a country and come up with proposals on how we can move forward.

Availability of technology is critical.  Our industries need to access affordable and efficient technologies in order to promote sustainable development. Essential ingredients of success are Technology coupled with a highly skilled workforce acquired through training. We have invested well in human resources and the technology question needs to be addressed thoroughly through different ways such as technology adoption and transfer alongside other critical issues.  It is time we invited our investors to start considering using fully our existing institutions for research, technology development and skills development.

The role of development finance is of prime importance and the Government has set up several financial institutions for driving the financing needs of industry which include Industrial and Commercial Development Corporation, Kenya Industrial Estates, Industrial Development Capital (formerly IDB). The roles of the development financial institutions include:

• To promote indigenous entrepreneurship by financing micro, small and medium scale enterprises.
• Enhance technology transfer to indigenous Kenyans.
• Decentralization and diversification of industry.
• Support creation of employment opportunities through industrial development.
• Support development of entrepreneurial skills.
• Serve as the investment arm of Government.

Reforms are a powerful tool in shaping the destiny of our industrial development. For example, we need to re-look at the export led strategy and the whole question of its linkage to domestic industrial growth. In agriculture we have seen the dairy industry, tea and coffee which have recorded growth in value addition with the entry of the private sector players who brought in competition, growth and diversification. The increase in exports of garments under AGOA has given the cotton industry  a boost but more needs to be done in this area. 

We need concerted efforts to increase value addition and to diversify our range of products. We need to strengthen the institutions that support industrial development so that they can deliver customized solutions to their clients. Solutions sought include technology packages from Research and Development institutions, a patent documentation system, financing packages from financial institutions, investment in human resources, and development of a package to attract foreign investors.

Allow me at this juncture to point out changes that have taken place in the Ministry of industrialization to re-position itself in meeting its mandate of developing industrial policies and creating enabling environment for industrialization.

First, we have restructured the Ministry into four departments to implement industrial strategies as explained in the recently launched Industrial strategic Plan covering period year 2008-2012. Secondly, we are in the process of concluding the National Industrial Policy, guiding on all issues involved in industrializing the country.

We need to deal with the question of how to improve industrial productivity through value addition and diversify in the manufacturing sector.  By addressing the above issues and making concrete proposals to contribute towards our National Industrial Policy under preparation, we then have a strong case to celebrate.

By Dr. Eng. Kibicho Karanja,
Permanent Secretary, Ministry Of Industrialization (Kenya)