On the positive side, devolution has brought services closer to the people and enhanced citizens’ participation in governance.
For Kenya’s manufacturing sector, devolution came with hope. Hope for enhanced access to resources.
Hope for a surge in economic opportunities at the county level. Hope for increased focus on developing local industries and enhanced value chain linkages, as well as streamlined operations driven by efficient governance.
On the converse, businesses are facing myriad challenges, such as low levels of public participation, insufficient allocation of resources to facilitate critical county functions, subsequently impacting effective and efficient service delivery, good governance and economic development.
Let us look at where we are, starting with county industrial competitiveness.
One of the top key issues businesses have overwhelmingly identified that has led to increased costs is costs related to the movement of goods, now famously known as county movement taxes.
Article 209 (4)(5) of the constitution mandates that the counties’ revenue-raising powers should not jeopardise national economic policies or activities across counties.
However, the move by the Senate to pass the County Licensing (Uniform Procedures) Act, 2024, has given hope to businesses that the government is making an effort to tackle the county fees challenge through the law assented to by the President on June 28, 2024.
The main purpose of the Act is to establish standard uniform procedures for licensing by county governments.
The devolved system of government, if correctly implemented, is a powerful economic tool that can spur industrial growth and transform Kenya into an industry-led economy. However, realising this vision requires deliberate action. First, we need a harmonised regulatory and tax framework.
This will enable businesses to operate under a consistent, stable and predictable environment across countries, reducing the heavy compliance burden and facilitating smooth cross-country operations.
Third, streamlined and simplified licensing. This will enable businesses to easily access and complete licensing through simple, uniform and digitalised systems.
Fourth is a supportive physical and digital infrastructure. Counties need to provide reliable infrastructure, such as roads, water and sewerage systems that meet industrial needs, enabling manufacturers to produce and distribute efficiently.
Creating manufacturing-centric counties is within reach, it is doable with goodwill from all relevant stakeholders.
It can be achieved by making intentional decisions to fast-track alignment between the national and county governments on regulations, taxes and levies, establishing national guidelines for county-level manufacturing policies and creating a one-stop regulatory and tax portal that is accessible to businesses across all counties.
Industrial development is predicated on the availability of public goods.
County governments need to prioritise county infrastructure investments aligned with industrial needs, expand industrial parks, special economic zones and digital infrastructure and encourage public-private partnerships to close infrastructure gaps.
The writer is the chief executive of the Kenya Association of Manufacturers. [email protected].
