Economy, News

Why focus on exporting Kenyan Products will cure our bedridden economy

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.

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About Dr. Kalua Green

He is the Chief Stew­ard of Green Africa Group, a con­glom­er­ate that was envi­sioned in 1991 to con­nect, pro­duce and impact var­i­ous aspi­ra­tions of human­i­ty through Sus­tain­able Mobil­i­ty & Safe­ty Solu­tions, Eco­pre­neur­ship & Agribusi­ness, Ship­ping & Logis­tics, Envi­ron­men­tal Pro­tec­tion Ini­tia­tives, as well as Hos­pi­tal­i­ty & fur­nish­ings sectors

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