We are living in difficult economic times. In 2020, global Foreign Direct Investment (FDI) flows fell sharply by 35 percent. This was akin to losing just over one third of the water in your tank. If you were using that water for irrigation, at least a third of your crops would potentially wither and die. Decreased investment and the accompanying depressed economy have resulted in a death of jobs across the country.
Sadly, the immediate future doesn’t look good. According to the World Bank, 52 percent of large companies expect that their operations will only return to full capacity in 2022. If large companies with billions of shillings at their disposal are staggering in such a manner, then the SMEs are definitely flailing on the ground.
But all is not lost. Last month, the World Bank released a report that vindicated my lifelong belief that the environment can revitalize the economy. In a report aptly titled ‘The Economic Case for Nature,’ the World Bank revealed that if we fail to protect ecosystem services, the global GDP risks declining by nearly Ksh300 trillion annually by 2030. These ecosystem services include marine fisheries and wild pollination. Tragically, 14 of the 18 assessed ecosystem services have declined since 1970.
As our economy begins awakening from the Covid-induced slump, we must increasingly anchor it in nature. This means initiatives like boosting fisheries both at coastal Kenya and amongst Lake-adjacent communities like those in the Nyanza and Turkana regions.
As such, last month’s launch of a Sh120 million fish processing plant in Kakamega was a step in the right direction. Fish processed in the plant will be exported to Europe thus earning the country valuable foreign exchange revenue and creating local jobs.
Incidentally, the currently weak shilling presents Kenya with a golden opportunity to earn substantially more from exports. Currently, 1,000 dollars exchanges for about Ksh108,500. Before the Corona virus threw a grenade into the Kenya shilling, the same 1,000 dollars would have exchanged for Ksh,100,000 and below. What this means is that a Kenyan company importing a product worth 1,000 dollars is paying Ksh. 8,500 more for the product. If that company is buying millions of dollars’ worth of products, it will lose millions of shillings. Which is why we must take urgent steps to revitalize our export industry, just as Governor Oparanya has done through the fish processing plant.
According to the Central Bank of Kenya, imports of goods increased by 21.9% in the first half of this year. However, this was largely because of increased importation of oil and other intermediate goods that are used in manufacture. The increased cost that these manufacturers are incurring because of a weak shilling will be passed on to the consumer and further deplete the pockets of Kenyans.
Against this backdrop, I return here to suggest that what may sustain our economic growth is reforms that will lead to the uptake of ‘Made in Kenya’ products. If ever there was a time for us to cultivate a laser focus on local manufacture and local production, it is now. The national government must introduce strategic and tactical initiatives to boost local production and export.
Our local manufacture report card is dismal. The UNIDO 2020 Competitive Industrial Performance (CIP) Index ranked Kenya’s industrial competitiveness at a lowly position of 115 out of 152 countries.
As one of the ways of boosting local manufacture, the Kenya Association of Manufacturers (KAM) where I serve as Chairperson of the Environment and sustainability Committee, is ready to cooperate with the Government and various stakeholders to heighten local production and consequent export of those local products.
Currently, our key export products include horticulture and apparel products. We must add many more products to this export portfolio. Even SMEs must be supported to join the export party. When I was in my twenties, I exported a lot of handicrafts and made a fortune. Now is an even better time for such exports. Let us therefore move from plan to action by thinking and acting green.