Assessment of Industrial Issues in the Region
Kenya’s strategic geographical location makes it a major gateway for trade to the Eastern and Central African region. Kenya also plays host to several international organizations, including headquarters of UNEP, UN- Habitat, Lake Victoria Commission and numerous non-governmental and multinational organizations. These provide enormous opportunities for “hub and spoke” activities.
After decades of poor economic performance, the Government of Kenya, elected into power for the period of 2003-2007 and 2007-2012 has set in place reforms, facilitating a reversal of this negative trend. Amongst others, measures aimed at addressing more targeted budget expenditures and issues of poor governance, have lead to a sustained economic growth over the years despite negative external factors, such as an increased import price for oil.
Since 2003, the sector has shown improved growth resulting from enhanced power supply, increased market opportunities within the East African community (EAC) and the Common Market for Eastern and Southern Africa (COMESA), favourable tax reforms and other incentives. The Value of total exports to EAC and COMESA markets increased by 20.8 % and 14.3% respectively in 2006 and 2007. The leading market for Kenya’s exports is Africa and the COMESA region remains the most important destination for Kenya’s exports.
The agricultural sector is the largest contributor to Kenya’s economy with at least 60% of Kenyans deriving their livelihood from agriculture. The manufacturing sub-sector in Kenya accounts for the greatest share of industrial production output and follows closely to agriculture forming the core of industry. Over the years, employment in this sector has grown at a faster rate than in any of the other Private Sector activities. Micro, small–scale and medium-scale manufacturing enterprises are an important part of the Kenyan industry. Access to reliable and affordable energy remains a challenge particularly for the rural population of Kenya, as only 4 % of the rural population has access to grid electricity. This in turn not only decreases the quality of life for rural communities but also significantly hampers agricultural and small scale manufacturing productivity.
The government policy focus after the ERS period has shifted to long term planning as indicated in Vision 2030. Vision 2030 aims at raising Kenya to a globally competitive and a prosperous nation with high quality of life by the year 2030. The vision‘s three pillars are: Economic , Social and Political pillars. Other policies anchored into Vision 2030 include: the Private Sector Development Strategy (2006-2012), Industrial Masterplan (MAPSKID) and the National Industrial Policy being developed.
This second phase of the Integrated Programme has thus been designed in line with these important strategy documents. The objective of the Integrated Programme is building capacities for competitive industrial development in Kenya through enhanced access to information and technology, to harness their economic potential through provision of reliable energy, strengthen the supply side of production through enhancing product design and quality, promote value addition for agro-business and create an improved business environment through monitoring of investment flows. The design of the Integrated Programme Phase II has been conducted in close consultation with the main counterpart, the Ministry of Industrialization in conjunction with other stakeholders. It has also benefited from the Independent Evaluation of the KIP Phase I (2002-2006), which pointed out strengths and weaknesses to be learnt from.
