How imported eggs will ruin Big 4 agenda :: Kenya

The government prioritized the manufacturing sector in the Big 4 Agenda mainly because, through the provision of local content, it functions as a support provider and a catalyst for the achievement of other pillars. In order to implement it effectively, the President has mandated all government procurement entities to increase the quota of locally produced goods to implement the Buy Kenya Build Kenya policy.

Long run

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However, we are currently witnessing an unfortunate increase in imported goods purchased by public entities. The government would have tripled its imports to nearly 41.72 billion shillings, from 10.09 in 2013 to 18.15 billion in 2014.

So, on one side, we have an ambitious goal of increasing manufacturing output from 0.2% per year to 36% to reach the Big Four agenda, but on the other hand, our actions are contradictory and pulling in the opposite direction.

If we want to achieve our development goals, we must stop being a consuming nation; we must produce. There is an urgent need for public entities to deliberate on the promotion of local content beyond the public declaration.

Local Content

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One way to do this is to develop a local content policy framework and a criterion for determining what is actually classified as locally manufactured or produced – as well as the methods by which this will be determined.

Critically, the scope of the foregoing should consider, for example, how much value should go into such a product? What policies should guide the development of local content and what threshold of local value should we adopt? The local content policy framework would address this issue and implement the Disposable Procurement Act, which provides for a local preference of 40%.

The undeniable effect of a progressive local content policy is that it will stimulate the use of local production factors such as labor, capital, the supply of goods and services, as well as value creation in the national economy. This, in turn, will attract foreign investment stimulating the creation of jobs that the country desperately needs.

Main Ingredients

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The ingredients for doing this already exist. For example, manufacturers publish twice a year a list of locally available goods.

This list should be adopted by the Government and published in the Gazette every fiscal year for all departments to adopt. Secondly, the regulations on government procurement and asset disposal have been developed jointly with the private sector, but have been outstanding for a year.

The Regulations proposed margins of preference and reserves for local manufacturers and unbundling to improve local supply. These must be accelerated.

Third, the realization of local content in government procurement should be included in the performance contract of senior officials to ensure commitment and follow-up. Finally, and very importantly, prompt payment by national and national governments is paramount. Local, are discouraged from providing to the government, due to late payments that disadvantage them and sometimes cripple their operations.

Unfair Competition

Unfair competition from cheap imports, illegal trade and counterfeiting, lack of information on calls for tenders, bonding of public offers and a general misconception about the quality of goods produced locally pose other challenges.

Kenya must reduce its import bill by more than 1.2 billion shillings and increase the value of exports from 600 billion to 1.8 billion shillings in the next three years in order to develop the industrial sector and stabilize the economy. This is not possible if we do not immediately reverse the current import trend. To this end, the development of local content policies and the effective implementation of the Public Procurement and Alienation Act will need to be accelerated.

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Ms Mutahi is the Chairlady of the Kenya Manufacturers Association and can be contacted on [email protected]