KAM pushes for tech-driven industries in race for Africa market

Kenya must embrace technology in driving industrial growth and output, the Kenya Association of Manufacturers now says, as the country moves to tap opportunities under the African Continental Free Trade Area (AfCFTA).

This, in addition to continued research and development, will ensure the country grows qualitative and quantitative offerings of goods to increase competitiveness, and continue to benefit from the continent, which is its biggest export market.

Statistics show that the AfCFTA creates a large single market with a population of over 1.2 billion people and a combined GDP of about $ 2.5 trillion (Sh 380.5 trillion).

Data by the Kenya National Bureau of Statistics shows Africa remains the dominant destination for the country’s exports, accounting for 41 per cent of the total export earnings in 2022.

Total exports to Africa increased by 15.7 per cent to Sh357.7 billion in the review period.

This growth was mainly occasioned by a 17.7 per cent increase in exports to the East African Community (EAC) economic bloc, which accounted for 63.3 per cent of the total exports to Africa.

Speaking on Wednesday at the inaugural Kenya Industrialisation Conference in Nairobi, Kenya Association of Manufacturers (KAM) chief executive Anthony Mwangi said technology and skills drive industrial growth.

“Technological advancements serve as a key driver of industrial development and economic growth,” Mwangi said during a panel discussion.

He further called for collaboration in research between government, academia and the industry, in relation to industrial growth and economic progress.

“Research plays an essential role as a precondition for producing medium-high-tech goods,” Mwangi said.

He said collaboration ensures that research conducted by students is directly aligned with solving real-world challenges faced by the industry, fostering innovation and practical solutions.

Research and development represents the activities companies undertake to innovate and introduce new products and services or to improve their existing offerings.

It allows a company to stay ahead of its competition by catering to new wants or needs in the market.

KAM Head of Consulting and Business Development, Joyce Njogu, said the country must also impart “essential skills” to young individuals and facilitate continuous skills upgrading within the manufacturing industry.

"Getting young people trained in skills and providing skills upgrading within the manufacturing industry is crucial. We are competing to create sustainable jobs and ensure that young people are trained on the latest technology," she said during the conference hosted at the University of Nairobi.

Investments, Trade and Industry CS Rebecca Miano said: “Once a strong national manufacturing culture and foundation are in place, Kenya will maximise her industrial output in the multiple facets of production and value-addition of locally manufacturers goods.” 

Kenya is among six countries selected in August last year to participate in the pilot phase of the AfCFTA initiative on Guided Trade. The others are Cameron, Egypt, Ghana, Rwanda and Tanzania.

The government is keen to grow the manufacturing sector’s contribution to the GDP from the pre-pandemic average of 7.3 per cent (2.7 per cent in 2022) to 15 per cent by 2025 and 20 per cent by 2030. 

While the domestic market is on the cards, under the Buy Kenya-Build Kenya initiative, the country is also pushing to increase exports to the continent under AfCFTA and other international markets under a number of trade deals.

An increase in exports is expected to help the country cut on the trade deficit and high spending on forex to bring in both raw materials and finished goods.

According to the Kenya Economic Survey 2023, the country’s expenditure on merchandise imports rose by 17.5 per cent to Sh2.5 trillion last year, wiping away gains made on growth in earnings from exports which grew by 17.4 per cent to Sh873.1 billion.

The trade deficit widened to Sh1.62 trillion.