There is Every Need for Developing Our Local Manufacturing sector.
Two weeks ago I was hosted to a dinner at the Panda Chinese hotel along Kaunda Street by my Chinese friends. They were in the country to attend an event, a beauty expo, at the Sarit centre Westlands. It is unfortunate that a few days after I visited the Sarit centre, it went up in smoke. The beautiful thing however is that there were no loss of lives. After all, the mall had just finished hosting a beauty expo, one of its own kind.
From that dinner I learnt that the Chinese food is very tasty. Their tea is very lovely, their art of cooking rice, spinach and other delicacies gives one taste of a culture of devotion towards excellence. That explains why these guys have perhaps carried this attitude to their industrial sector. It is now a force to reckon.
My friends told me how they were surprised to find lots of foreign products stacked in almost all shelves in our supermarkets. They asked me if we manufactured anything locally. I immediately told them of Unilever Kenya, Johnsons and the like. Another quick question came in, are they not international companies? Of course they are.
The discussion shifted now to native locally owned manufacturing companies and I realized we could count them and even found out that they were not well developed. This thing really got into my nerves and left me wondering what is it we have done wrong. I realized that we have not devoted enough efforts to encourage native manufacturing.
In encouraging for native manufacturing, I don’t mean to say that we should ban importation of foreign products into the country. Nay, what I mean is that we should do everything possible to support local manufacturing to be as competitive as the multinationals.
We should first remember that those giant international companies were at one time small and it must have taken another company or government to extend their hand in helping them grow. In our time, the government could be that other big company to hold the manufacturing sector their hand so that they can grow. We can’t close cross border trade in favor of our locally produced goods, but we can control the imports while continually helping the manufacturing sector find ways they can be as well competitive within and across the borders.
As an example, my Chinese friends were from a company that is fully owned by the government but does sales in billions with serious profits. They then wondered how we work by allowing the private sector to struggle on their own even with matters that require government intervention.
For example, if the Chinese company wants to do shipments into Kenya, now that they are government owned, they don’t have any problems in doing their shipping with tax friendly and highly developed cargo handling procedures. The story of Kenya is different.
In my short time as a manufacturing start up entrepreneur in Kenya, I realized that the cost of production is the number one thing that kills our manufacturing sector. Beginning with the high cost of power which is an essential component in the manufacturing sector. Secondly is the high cost of raw materials which importers overprice at the expense of the manufacturer. They too blame bureaucracies in the port of Mombasa in clearing and forwarding for the overcharge the cargo costs.
Sometimes I wonder how a product comes from Uganda and yet is far cheaper than a locally made one. Don’t forget that we are the guys with the port at Mombasa. Ideally our products are the ones supposed to be very cheaper than theirs. The opposite is now true and it never raises any eyebrows. Power rates in Uganda are far much cheaper than in Kenya.
In doing my simple research, I realized that the construction/real estate and financial sector are top in number of millionaire entrepreneurs whereas the manufacturing entrepreneurs come in at either third or fourth number. But then it doesn’t end there. It further states that the first two are highly developed due to our high corruption levels. It thus means that when we see a booming real estate sector and high trading in land, you need no calculator to know that corruption is very high. This two sectors usually develop at the expense of the industrial sector.
Once we can work on corruption in the supply chain for the manufacturing sector, only then can we see availability of cheaper space, cheaper power rates, newer technologies, less cumbersome as well as affordable duties and taxes, then and then can we begin to see a growth among native manufacturing entrepreneurs.
As a matter of fact, we have a very affordable and skilled labor force within the region which means we are ahead than other EAC countries and only need to adopt latest technologies and also get enough government support to be competitive.
Donald Trump, the current president of the United States of America came into office on a promise of highly building the made in America that would have seen an increase in consumption of locally manufactured goods. He banked on the ripple effect of finally developing the local industrial sector hence create more jobs. Today, the USA level of joblessness is at the lowest level since the turn of the century at about 3.9%.
Once we develop our local manufacturing sector, the advantages we can reap from them are very enormous. We only need to work on the areas that are crippling the sector and straightening things up, then we can begin to see a real change in our economic development assuming corruption is going to be on a downward trajectory. And I hope we intensify our fight against corruption and merely stop campaigning about it.
Copyright @ 2018.